When Might Gas Prices Start to Come Back Down?
Exactly how long gas prices will stay elevated is impossible to predict, but we do have a few indicators that suggest drivers will need to dig in for the long haul.
The news on Tuesday that Russian oil imports will be banned in the United States is expected to push gas prices even higher, after a general rise since Russia initiated a conflict in Ukraine, and it’s likely that they may reach even higher levels.
President Joe Biden stated in making the announcement that it would “deliver another powerful blow to Putin’s war machine” and that the US “would not be part of supporting Putin’s war,” implying that the American people should be prepared for a long-term economic battle with Russia.
When will gas prices come down?
If you’re hoping this will be a quick turnaround, like last year when a cyber attack on Colonial Pipeline caused a supply disruption and a brief price spike, prepare to be disappointed.
Patrick De Haan, an expert on gas markets with GasBuddy, told 11Alive’s Christie Diez on Tuesday that this would be unlike previous increases we’ve seen. He recalled the gas price rise after the 2008 financial crash, and said, “I think this time around, it’s going to be longer. It’s going to be weeks and months.”
That’s because, at least partly, that one was a consumer-driven spike — demand increased because people were spooked about rapidly deteriorating economic conditions. This price increase is supply-driven.
Russia is one of the world’s top crude oil exporters, and targeting their supply means targeting global supply as a whole, implying that supply will be curtailed and prices will rise for as long as Russia is targeted.
And how long the US and other countries attack Russian oil supplies is largely determined by how long Russia keeps fighting in Ukraine.
At this time, there is no evidence that Russia is mulling a retreat. And if the war drags on indefinitely, or if Russia succeeds in destabilizing the Ukrainian government, Western countries may make a semi-permanent or even permanent shift away from Russian oil.
There’s no way of knowing what a permanent withdrawal of the West from Russian oil markets would mean for prices, though it’s difficult to foresee a situation where they return to normal in the near future.
That does not imply that it would persist indefinitely.
The United States has a number of options for replacing Russian imports, including increasing domestic gas production and importing additional oil from countries such as Saudi Arabia, Iran, and Venezuela.
There are other legislative options, such as decreasing fuel taxes, that could bring some price relief in the short term.
However, according to De Haan, the current situation will probably certainly remain long into 2022.
“No one will be able to avoid this, and it will be really terrible and ugly for several months,” De Haan predicted.
President Biden said during his address that prices have gone up 75 cents a gallon since Putin began his military buildup in February.
De Haan said he expects a slowdown in the increase from that rapid pace, even with the latest Russia move.
“I don’t think at this point that the increases will outpace what we’ve seen over the last week, meaning that we will continue to see increases, but it’s not going to be quite as fast and furious as what we saw over the last week,” De Haan said.
That’s the good news. Based on current conditions and what we’ll see going forward with the new ban on Russian oil imports, De Haan said he could see the national average going to about $4.50 a gallon in the weeks ahead.The bad news is that there’s still potential for national averages to reach eye-popping numbers.
Will gas go to a $5 a gallon national average?
This is the benchmark that De Haan is watching.
According to the GasBuddy expert, the real critical inflection point will be if Europe follows up with additional measures against Russia and cuts out some of their supply.
Europe depends far more on Russian oil than the United States does, and cutting out a significant amount of their intake on Russian oil would require them to look elsewhere for supply, increasing cost pressures around the world — including in America.
“Depending if the EU sanctions Russian energy as well, I think that will take us to $5 a gallon,” De Haan said. “So watch if that happens.
Experts Say a Dip Beneath $4 Won’t Happen Soon. International conflict aside, additional factors will keep gas at record-high price points this year. Gasoline prices have reached a historical high and fuel experts suggest that per-gallon averages won’t revert to below $4 until November