In the wake of Russia’s attack on Ukraine, which began earlier this week, gas prices in the Bay Area have already surged to record highs. Prices were reported to have reached an average of nearly 5 dollars per gallon across the region. When I filled up today, a gallon of Regular cost $5.05. This is the highest rate that has been observed in many years.
Gas prices at already been increasing before the Russian invasion. Inflation combined with supply issues were already driving prices higher. The instability in global markets as a result of the war in Ukraine is very likely to drive prices higher still.
Reasons for the High Prices
Although America gets relatively little of its oil from Russia, prices here are sensitive to prices globally. Because other parts of the world will be more impacted by Russia’s aggression, and any sanctions the United States and other countries impose, oil prices are likely to either continue increasing or at least remain high.
Those high prices on the global market will likely drive up prices for oil here in the United States. In turn, that will drive up the price of products made from oil, including gasoline. The effect may not be immediate, but it’s likely prices will continue to creep up over the next few weeks and months, depending on how the conflict in Ukraine proceeds.
How High Will Prices Go?
How much higher could the prices go? No one to know for sure. If the world continues to impose major sanctions, and Russia does not back down from its offensive war, it’s certainly possible the prices could increase by another dollar per gallon or more. That would certainly continue to contribute to inflation here in the Bay Area and in the United States more broadly.
Again, no one knows for sure what the extent of the increases will be. Hopefully, peace is achieved in Europe, and prices can begin to come down as supply increases. However, if the geopolitical issues continue, and especially as demand increases when people drive over the summer, the Bay Area could easily see one dollar per gallon increases, or more.
It’s very unlikely, in any event, they will see that the high prices of the last few weeks decrease substantially. Unfortunately, high gas prices in the Bay Area look like they’re here to stay.