Russia-Ukraine Escalation Sends Crude Oil to 8-Year Highs

Gas Prices Continue to March Higher

Photo: Bonnie King, Salem-News.com

(PORTLAND, Ore.) - The potential invasion of Ukraine by Russia is having a rippling effect on the global oil markets, sending crude oil prices higher, which in turn is driving up the price of gasoline in the U.S.

Drivers in 47 states are seeing pump prices rise. For the week, the national average for regular rises four cents to $3.53 a gallon. The Oregon average adds two to $3.99.

A Russian attack would be met by severe financial sanctions led by the United States and its allies. Russia will likely retaliate by withholding oil from the world market, which is already tight and struggling to keep up with demand as nations worldwide move on from COVID-related economic slowdowns.

“Russia is one of the world’s leading oil producers along with the U.S. and Saudi Arabia. If Russia chooses to take its oil from the global market, that would create even tighter supplies which would result in higher gas prices for American drivers,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.

Crude remains above $90 per barrel, about $31 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 fell from 9.13 million b/d to 8.57 million b/d. Total domestic gasoline stocks decreased by 1.3 million bbl to 247.1 million bbl last week, according to the U.S. Energy Information Administration (EIA).

Typically, a decrease in gas demand during the winter would put downward pressure on pump prices, but elevated crude prices continue to push pump prices higher.

With the Omicron variant, travel continues to be impacted by the coronavirus pandemic. Find AAA’s latest COVID-19 information for travelers here.

Quick stats

Wisconsin and Nebraska are the only states with week-over-week declines and both are just two-tenths of a cent. The average in New Mexico is flat.

California ($4.74) and Hawaii ($4.52) continue to have the most expensive gas prices in the country and are the only 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 Missouri ($3.18) and Arkansas ($3.19). This week no states have averages below $3 a gallon, same as a week ago. For the 59th week in a row, no state has an average below $2 a gallon.

Oregon is one of 49 states and the District of Columbia with higher prices now than a month ago. The national average is 20 cents more and the Oregon average is six cents more than a month ago. This is the 5th– smallest monthly increase in the nation.

Delaware (+36 cents) has the largest month-over-month increase. Idaho (-1 cent) is the only state with a month-over-month decline.

All 50 states and the District of Columbia have higher prices now than a year ago, and 11 states 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 average is $1.13 more than a year ago. This is the second-largest yearly increase in the nation. California (+$1.17) has the biggest yearly increase. West Virginia (+69 cents) has the smallest year-over-year increase.

West Coast

California is the most expensive state for the 57th week in a row with Hawaii, Oregon, Washington, Nevada, and Alaska rounding out the top six. Arizona is 10th. Oregon is third for the second week in a row.

All seven states have weekly increases:

• Nevada (+6 cents)
• Arizona (+5 cents)
• Hawaii (+5 cents)
• Alaska (+3 cents)
• California (+3 cents)
• Oregon (+2 cents)
• Washington (+2 cents)

The refinery utilization rate on the West Coast rose from 77% to 82.6% for the week ending February 11. 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 show a small decrease from 31.94 million bbl. To 31.18 million bbl.

Oil market dynamics

Additionally, EIA reported that total domestic crude stocks increased by 1.1 million bbl to 411.5 million bbl. The current stock level is approximately 11 percent lower than mid-February 2021, contributing to pressure on domestic crude prices.

For this week, crude prices could climb if EIA’s next report shows a decrease in total stocks.

At the close of Friday’s formal trading session, WTI slipped 69 cents to settle at $91.07. U.S. markets were closed yesterday for President’s Day. Today crude is trading around $92, compared to $92 a week ago. Crude prices are about $31 more than a year ago.

Drivers can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.

Diesel

Find current fuel prices at GasPrices.AAA.com.