Russian Invasion of Ukraine Results in Surging Oil and Gas Prices

As the conflict continues, the oil markets will likely respond by continuing to increase the price of crude oil.

Photo by Bonnie King, Salem-News.com

(PORTLAND, Ore.) - Russia’s violent invasion of Ukraine has rocked the global oil market, with crude spiking above $100/bbl, a price last seen in July 2014. The increase in the price of oil has led to higher pump prices in the U.S. with gas prices climbing in all 50 states. For the week, the national average for regular jumps nine cents to $3.62 a gallon.

The Oregon average rises a nickel to $4.03.

The Oregon average gas price climbed above $4 a gallon last Thursday, Feb. 24, for the first time since October 2012. The national average is at its highest price since July 2014.

“Russia’s invasion of Ukraine and the responding escalating series of financial sanctions by the U.S. and its allies have given the global oil market the jitters with crude climbing above $100 per barrel. Like the U.S. stock market, the oil market responds poorly to volatility and the unknown.

"It’s a grim reminder that tragic events on the other side of the globe can impact people around the world, including American consumers,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.

Russia is one of the top three oil producers in the world, along with the U.S. and Saudi Arabia. Russia produces about 10 million barrels a day. There are concerns that with the severe economic sanctions that the U.S. and other western nations have imposed on Russia, that it could retaliate by withholding oil from the global market.

Europe, in particular, depends on oil from Russia. The world oil market is facing the same factors as many other industries – tight supplies and higher demand as economies around the world emerge from COVID-related economic slowdowns.

Crude is about $105 per barrel today, about $44 higher than a year ago. On average, about 53% of what we pay for in a gallon of gasoline is for the price of crude oil,12% is refining, 21% distribution and marketing, and 15% are taxes, according to the U.S. Energy Information Administration.

U.S. gasoline demand rose slightly from 8.57 million b/d to 8.66 million b/d. Total domestic gasoline stocks decreased by 600,000 bbl to 246.5 million bbl last week, according to the U.S. Energy Information Administration (EIA).

The increase in gas demand and a reduction in total supply contribute to rising pump prices. But increasing oil prices play the lead role in pushing gas prices higher. Pump prices will likely continue to rise as crude prices continue to climb.

Travel continues to be impacted by the coronavirus pandemic. Find AAA’s latest COVID-19 information for travelers here.

Quick stats

California ($4.84) and Hawaii ($4.57) continue to have the most expensive gas prices in the country. They are joined by Nevada, Oregon and Washington which are the other states in the nation with averages above $4 a gallon. while all 50 states and the District of Columbia have averages above $3 a gallon.

The cheapest gas in the nation is in Arkansas ($3.24) and Mississippi ($3.27). This week no states have averages below $3 a gallon, same as a week ago. For the 60th week in a row, no state has an average below $2 a gallon.

All 50 states and the District of Columbia have higher prices now than a month ago. The national average is 24 cents more and the Oregon average is 11 cents more than a month ago. This is the 6th– smallest monthly increase in the nation. North Carolina (+40 cents) has the largest month-over-month increase. Idaho (+2 cents) has the smallest.

All 50 states and the District of Columbia have higher prices now than a year ago, and six states, including Oregon, have a current average that’s a dollar or more higher than a year ago. The national average is 90 cents more and the Oregon gas price average is $1.08 more than a year ago. This is the third-largest yearly increase in the nation. California (+$1.15) has the biggest yearly increase. West Virginia (+65 cents) has the smallest year-over-year increase.

West Coast

California is the most expensive state for the 58th week in a row with Hawaii, Nevada, Oregon, Washington, and Alaska rounding out the top six. Arizona is eighth. Oregon slips to fourth after two weeks at third.

Like the rest of the country, all seven states have weekly increases: Arizona (+11 cents) has the largest in the region while Washington (+3 cents) has the smallest.

The refinery utilization rate on the West Coast fell from 82.6% to 79.9% for the week ending February 18. The rate has ranged between about 76% and 88% in the last year.

According to EIA’s latest weekly report, total gas stocks in the region fell from 31.8 million bbl. To 29.88 million bbl.

Oil Market Dynamics

Additionally, EIA reported that total domestic crude stocks increased by 4.5 million bbl to 416 million bbl. The current stock level is approximately 10 percent lower than mid-February 2021, contributing to pressure on domestic crude prices.

At the close of Friday’s formal trading session, WTI decreased by $1.22 cents to settle at $91.59. At Monday’s formal trading session, WTI jumped up $4.13 to close at $95.72. Today crude is trading around $104, compared to $92 a week ago. Crude prices are about $43 more than a year ago.

Diesel

Source: AAA/Oregon