Fresno gas prices rise amid Russian assault on Ukraine. Here’s what could be ahead
Even before Russia’s invasion of Ukraine on Wednesday night, weeks of tension between Russia and Ukraine were serving to drive up global oil prices and, in turn, the prices that drivers pay for fuel at their local gasoline stations.
The invasion itself, and the promise of economic sanctions by the U.S. and its global allies, appear likely to trigger more gasoline price increases across the country, including Fresno, over the coming weeks, industry experts predict.
The average price for a gallon of regular unleaded gasoline in the Fresno market on Thursday morning was about $4.60 per gallon, according to GasBuddy.com, which uses customer reports from individual stations across the country to provide real-time estimates of fuel prices.
While the prices vary from station to station – considerably less at some places, considerably more at others – the market average is about three cents higher than it was on Wednesday, and about 10 cents higher than a week ago.
“We’ve already seen oil prices going up in the last eight weeks or so as a result of what was unfolding in Russia between Russia and Ukraine,” Patrick DeHaan, head of Petroleum Analysis for GasBuddy, said Thursday. “So there’s already a price we’re paying at the pump.”
In the wake of the overnight attack, DeHaan said crude oil prices were up by as much as 8%, but later calmed to a lower overall increase by the close of commodities trading.
Wholesale gasoline prices started at about 16 cents per gallon higher Thursday morning, “but closed the day in many areas up about 10 cents or even 8 cents a gallon,” DeHaan added in a virtual press conference Thursday afternoon. “We have already seen that many of the … terminals where fuel tanker trucks fill up have raised their prices to reflect today’s higher cost.”
In turn, he said, “gas stations are raising their prices to reflect the increase in cost.”
Factors behind increase
The reason that a military conflict half a world away can have such ripple effects on California’s gas prices is Russia’s role in the global oil market.
Russia is the second largest oil producing country in the world, DeHaan said, pumping out the equivalent of about 10% of the world’s supply. If the United States and allies follow through on imposing economic sanctions on Russia, Russian president Vladimir Putin could order limits on its oil exports.
“That’s the primary concern here, that Russia holds a significant portion of global oil production in its hands,” DeHaan said. “Should the situation escalate, it’s not imposible that Russia may use oil as a weapon” by limiting oil exports. Such a move, he said earlier Thursday, could “inflict tremendous damage on the global economy.”
The American Automobile Association which also tracks gasoline prices across the country, offered a similar assessment of Russia’s possible response to sanctions. “If they choose to withhold their oil from the global market, such a move would eventually be reflected in higher gas prices for American drivers,” said Andrew Gross, a AAA spokesperson.
Oil supplies worldwide are already tight as countries continue to emerge from COVID-related economic lulls, AAA reported.
California’s gasoline prices are inching toward $5 a gallon — a level that could persist for some time. “California could stay near or above $5 a gallon for a few months. It could get worse than that if Russia further inflames the situation,” De Haan said.
California already has the highest average gasoline prices in the U.S., an average of about $4.77 per gallon on Wednesday compared to the nationwide average of about $3.54 per gallon, according to AAA estimates.
One reason California’s gasoline prices remain the highest in the nation are its taxes. State motorists pay the highest fuel taxes in the country, according to the American Petroleum Institute. As of Jan. 1, the combined state and federal motor fuel taxes and fees paid in California was 86.55 cents per gallon. Next highest was Illinois at 78 cents. U.S. average was 57.09 cents per gallon.
Adding to the mix is the anticipated increase in consumption as weather improves and people begin traveling more. Already, prices have been driven up by increased demand. “The seasonality that causes prices to swell is just getting started,” DeHaan said.
The Sacramento Bee contributed to this report.
This story was originally published February 24, 2022 at 11:39 AM.
