How Will War in Ukraine Affect the Bay Area?

Yesterday, the New York Times and many other news outlets reported that Russia had begun a war and possible invasion of Ukraine. The war was long expected, with the White House warning multiple times that a pending invasion was likely. Although Ukraine and Russia can feel very far away, there are several ways that the war will likely impact people here in the San Francisco Bay Area.

Higher Energy Prices

Bay Area energy prices had already reached record highs before the conflict in Ukraine. This was due to several deeper issues, including imbalances between supply and demand (caused in part by supply chain issues). In late Winter, prices at the pump surged. Bay Area residents have also reported paying record-high energy bills to PGE.

The war in Ukraine will likely push Bay Area gas prices–which exceeded $5.00 per gallon even before the invasion–even higher. It’s possible that prices could reach as high as $7.00 per gallon over the Summer if the conflict continues. Geopolitical strife–especially in places with high oil output–can cause instability in these prices. Russia may also impose sanctions on the United States or Europe, further exacerbating high prices.

Expect a big surge in gas prices over the coming weeks and possibly months here in the Bay Area.

Impact on Workers

Many Bay Area high-tech companies rely on engineers, developers and other skilled workers from both Russia and Ukraine. These workers are likely to be impacted by the conflict. They may be unable to return to their countries due to travel restrictions, or their families back at home may be impacted by the war.

It’s unclear what impact this will have in the immediate term. But in terms of American regions that could be impacted negatively by a war in Ukraine, the Bay Area ranks highly because of our region’s reliance on skilled workers from that part of the world.

Market Impacts and Taxes

The stock market in the United States dropped sharply on news of the invasion of Ukraine. It may recover. But if the conflict continues, markets could be impacted. The value of stocks could drop, and people with large investments could lose money and income.

This would impact California in a disproportionate way. The California budget is based around taxing capital gains as ordinary income. Taxing these increases in the value of investments is a big way that California raises revenue.

If markets enter a prolonged slump due to the war, that would mean fewer investment gains. In turn, that would mean less tax revenue for the state. That change could impact the state’s budget, or even its ability to provide certain programs.

Of course, no one knows exactly how markets will move. But any uncertainty on the global scale can have a big impact. We might feel that impact strongly here in the Bay Area.

Hoping for Peace

The human scale of the impact on Ukraine remains to be seen, but it is likely to be high. Bay Area residents may feel the impacts personally in a wide variety of ways.

Thomas Smith

Thomas Smith is a food and travel photographer and writer based in the San Francisco Bay Area. His photographic work routinely appears in publications including Food and Wine, Conde Nast Traveler, and the New York Times and his writing appears in IEEE Spectrum, SFGate, the Bold Italic and more. Smith holds a degree in Cognitive Science (Neuroscience) and Anthropology from the Johns Hopkins University.

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