GREEN BAY, WI (WTAQ) – Sanctions being levied against Russia could lead to higher gas prices across the world if the country decides to retaliate.
Gas prices have been inching up over the past weeks in preparation for the Russian invasion of Ukraine. Now that the US and other countries are issuing sanctions, GasBuddy Senior Petroleum Analyst Patrick De Haan says Russia could respond by using oil prices as a weapon and curtail supply.
“We’ve already seen prices starting to inch up over the last 8 weeks or so, based on the prospect that this could happen. Now that it happened, we’re waiting to see if Russia will disrupt oil exports,” De Haan told WTAQ News. “Russia could curtail oil exports to the global market. They already did that last fall with natural gas. When the Germans delayed the Nord Stream 2 pipeline, Russia responded by cutting natural gas supplies. And that’s the concern this time.”
But unless Russia completely severs oil exports, De Haan doesn’t expect prices in our area to hit the $5 per gallon range. Even then, he says it’s still improbable but not impossible.
Another factor that comes into play every year is the spring switch from winter to summer blends of gasoline.
“Some whiplash is going to hit us in the next month or so. I think by Memorial Day, Wisconsin will be just under $4 per gallon as long as we don’t get any other bad breaks…I think it’ll stick around for at least the first half, maybe most of the summer before we start to see some relief toward the end of the year,” De Haan said. “If we do [get bad breaks], there’s a possibility that Wisconsin could hit that $4 a gallon mark by Memorial Day.”
If things go south in the Russia/Ukraine situation, he wouldn’t be surprised if Wisconsin hit the all-time record average of $4.10 – which was set in 2008.
“How long could it stick around? That’s contingent on how long this Russia situation is over our heads. Does it escalate? Do they prolong it?” De Haan said.
And while there is some possibility for relief in the prices from other deals, De Haan isn’t overly optimistic.
“While Russia is grabbing headlines, The U.S. may ink another nuclear deal with Iran which could legitimize and allow their oil supply to reach global markets. That could offset part of the blow,” De Haan said. “There’s a lot of range for possibilities for gas prices this year, and most of them don’t look very good…Nearly all of the possibilities indicate that prices will continues to go up and be in that mid to upper $3 per gallon range for most of the summer. There’s almost no possible outcomes in which gas prices decline by the time summer starts.”
Wisconsin hit the $4 per gallon range in 2011-2012 as well. Current averages are $3.26 in Green Bay and $3.27 statewide. De Haan says Wisconsin remains on the lower end for average gas prices across the country.
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