Economists, energy experts warn of higher gas and other prices due to U.S. tensions with Russia

Published: Feb. 22, 2022 at 6:18 PM CST
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NEW ORLEANS (WVUE) - Americans have a big stake in the growing tensions between the U.S., its NATO allies, and Russia because economists and energy experts say the ongoing dispute could send gasoline and prices some other necessities higher in the U.S.

For months, Americans have been feeling pain at the gas pump and now it is expected that oil prices will rise higher and as a result the cost of gasoline.

Walter Lane, Ph.D., is a UNO economist.

“Yes, especially gas prices will be the first thing we see. Oil prices on the international market just went up to a hundred dollars a barrel already today and that will be trickling down to us, in terms of, higher gasoline prices and of course, fuel prices affect everything else that we do,” said Lane.

While the U.S. produces a lot of oil it still relies on Russia.

Eric Smith is a professor at Tulane University’s Energy Institute.

“We import about 500,000 barrels a day and virtually all of it is either heavy crude or it is what they call heavy “Resid” or residual oil,” said Smith. “We have the equipment to handle heavier oil and, in fact, we require heavier oil for our refineries.”

Smith says the question is how high oil prices will climb.

“And the reports I’ve seen said to expect something between an $8 and $10 increase in crude oil as a result of these tensions,” he said.

The U.S. stock market is already jittery over whether Russia will invade Ukraine.

But Lane says investors should not make erratic moves because of that.

“Well, no you have to be careful with that. Of course, whenever there’s a threat of anything that disrupts world economies the stock market gets nervous, now I mean it depends on if this turns into an all-out war then things will obviously get a whole lot worse,” said Lane.

President Biden announced U.S. sanctions against Russia on Tuesday afternoon. He said defending freedom will have costs aboard and, in the U.S., but added that his administration is working to limit negative effects on gasoline prices.

“Europe is going to be affected a lot worse than we are, some big effects in Europe but the world is an economy that’s all tied together these days., so everybody will be affected by this,” said Lane.

Smith commented on the level of oil parts of Europe get from Russia.

“It supplies about 30% of the crude oil used in western Europe, so that’s second only to the amount of gas they supply to Europe which is over 40%,” Smith.

Despite the negative impact of higher gas prices on consumers, Louisiana benefits from oil prices that are elevated.

“A lot of jobs and things in this state that are tied to the oil industry and this could be a positive effect for them,” said Lane. Some analysts say a broad attack on Ukraine by Russia could cause significant spikes in energy and food prices and fuel fears about higher inflation.

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