KALAMAZOO, Mich. — Gasoline prices jumped to their highest level in eight years this week. This comes as tensions continue to rise between Russia and Ukraine.
“The national average is at its highest level since 2014,” Patrick De Haan, Head of Petroleum Analysis at Gas Buddy, said. “The price of oil at its highest level since 2014. A lot of the reason why oil prices have escalated really since after Christmas was because this has come into the limelight.”
De Haan said demand for oil is going up, while production is still lagging due to COVID-19.
“I would estimate that oil prices are probably $5 to $10 a barrel higher because of this specific situation,” he said. “The other reason we’re much higher than a year ago is because the economy has broadly recovered, everything’s reopened, Americans are getting out, we’re flying more, we’re driving more. That’s why this the timing of this is so critical and why it could have such a big impact on oil prices “
President Joe Biden warned this week there is “very high risk” of Russia invading Ukraine in the next few days, which likely would lead to another rise in oil prices.
“I think it could bring a spike in gas prices in as little as is maybe three to five days,” De Haan said, of the impact on Michiganders if Russia invades. “A lot of it is in the details but oil prices would likely immediately spiked $5, $10, maybe $15 a barrel and that would be felt probably within a week of it happening.”
Adrienne Woodland, spokesperson for AAA in Michigan, said gas prices in Michigan are at a state average of about $3.35 but warns an increase in oil costs may cause more pain at the pump.
“Crude oil prices have been trading around the $90 barrel mark in the last week or so and that’s one of the main factors that has put upward pressure on pump prices,” she said.
De Haan warned that gas prices always see a large uptick in the spring when more people are out traveling. Gas could cost as much as $4 per gallon by May, De Haan said.
“The Russia situation could cause oil prices to surge whenever it happens, if it happens,” he said. “But even outside of Russia, gas prices generally start to go up every week or two starting in March and I think that that could lead to prices at $4 maybe as early as late April or Memorial Day, somewhere in that timeframe.”
When asked when we could see prices drop back down, De Haan said it’s hard to predict at this time.
“Before the whole Russia situation came about, I would have expected by the end of the year, probably sometime in August, September,” he said. “The only good news about high prices is that it incentivizes oil companies and OPEC to produce more oil– the higher prices go, that in turn will eventually be bring prices back down.”