CLEVELAND (WJW) – On Tuesday, President Joe Biden announced new sanctions were being imposed on Russian oligarchs and banks that “cut off Russia’s government from Western financial institutions.”
The move comes after Russian forces rolled into Eastern Ukraine, which President Biden referred to as an “invasion” for the first time.
Now, there is concern that Russia could retaliate by stopping or slowing oil exports to the United States, impacting the already rising fuel costs.
New data from the Energy Information Administration (EIA), provided by AAA, finds total domestic gasoline stocks decreased by 1.3 million barrels to 247.1 million barrels last week.
On the other hand, gasoline demand fell from 9.13 million barrels per day to 8.57 million barrels per day.
Typically, a decrease in gas demand during the winter would put downward pressure on pump prices, but instead elevated crude prices continue to push pump prices higher.
Also on Tuesday the price of crude oil rose to more than $92 per barrel.
“It is clear that it’s heightened to a situation where the markets are reacting and reacting very negatively,” said Michael Goldberg, Case Western Reserve University Associate Professor at the Weatherhead School of Management and Executive Director at the Veale Institute for Entrepreneurship.
As hopes for a peaceful resolution wane, prices of gasoline reached the highest numbers since 2014.
“Russia produces a significant amount of oil and natural gas,” said Goldberg, “Ukraine is a very important energy distribution hub.”
According to AAA, the average gas price across Northeast Ohio jumped 10 cents this week to $3.34 per gallon and was selling for $3.38 at some gas stations on Cleveland’s West Side.
That’s between 70 and 90 cents more than February 2021.
“You’ve seen a pretty hefty increase this week,” said Lynda Lambert, Spokesperson AAA East Central. “Nationally, the trend has been for it to go up 3 to 4 cents per week.”
Lambert said the geopolitical crisis is impacting prices because Russia is the “third largest producer of crude oil in the world.”
The cost per barrel may not have topped off yet, with some predicting it could surpass $100 per barrel.
“The price has been climbing consistently over the last couple of months,” said Lambert. “And then you factor in the economy, inflation and the pandemic.”
President Biden promised Tuesday to closely monitor energy supplies and take robust action to make sure the sanctions do not come back to hurt the United States.
“We’ve seen the U.S. move towards tapping into oil out of the strategic reserve; it didn’t really move the needle much,” said Goldberg.
In recent years, the U.S. has also been moving towards energy independence, and there is also talk of shale producers ramping up production to provide the market with more stability, said Goldberg.
But he says this is also a humanitarian crisis that is personal to Northeast Ohio, which has a large population of Ukrainian immigrants.
Many are very worried about what Russia might do next.
“There are many people here in our community with family back there in Ukraine and we have the real threat of perhaps the first armed conflict in Europe since World War 2,” said Goldberg.
Both Goldberg and Lambert anticipate gas prices will rise further before stabilizing, depending upon how Vladimir Putin responds to the sanctions.
AAA is providing motorists the latest gas prices nationally and locally at GasPrices.AAA.com