Gas prices nationally have surged to nearly an 8-year high and experts say more costly fuel bills could be coming with both the possible Russian invasion of the Ukraine and the typical rise in prices as summer nears.
Nationally, gas prices on average are at $3.51 a gallon for regular as of Friday, according to GasBuddy.com. That’s up nearly 20 cents from last month and 91 cents from the same time last year. That matches prices not seen nationally since the summer of 2014.
New Jersey is seeing similar price increases with the average now at $3.60 a gallon for regular, up 23 cents from a month ago and nearly 90 cents from a year ago, according to GasBuddy.com.
“I worry that we could see some really high gasoline prices in the coming months that will have a profoundly negative effect on large portions of the population,” Robert Sinclair, a AAA Northeast spokesman who tracks gas prices, told NJ Advance Media.
While he declined to predict how high gas prices could go, Sinclair said increased demand and the switch to summer blend gasoline alone has led to price increases of 25 to 30 cents per gallon in the past.
The continued pain at the pump might make price shopping more of a necessity and Gas Buddy’s website shows how that might pay off, with the lowest price in the state at $3 a gallon for regular recorded at a Sunoco on Route 22 in Hillside. A price that low hasn’t been seen since May.
Crude oil, the raw product that gasoline is refined from, is trading on commodity markets for $91.76 a barrel, down from $95.46 high for the year that hit on Valentine’s Day. Oil prices had not been that high since since the fall of 2014, according to NASDAQ.
“Gasoline prices continue to rise as a result of the rising price of crude oil, which continues to go up due to worries among oil traders that a war between Russia and Ukraine is imminent and would disrupt the flow of oil with both countries in the dispute major oil producers,” Sinclair said.
Sanctions or a slowdown in the flow of Russian oil to the world market would increase prices, he said.
U.S. Energy Information Administration ranks Russia as the third largest oil producer in the world, after Saudi Arabia and the United States.
The U.S. consumes more oil at 20.54 million barrels a day than the 18.61 million barrels of oil it produces, based on EIA 2020 statistics. Not all those 18 billion barrels stay here. The EIA reported that 8.5 million barrels a day of U.S. produced crude oil is exported.
U.S. oil is exported to countries where it will get the highest price, which are Mexico, Canada, China, Japan and India, the EIA reported.
Would prices go down if the U.S. kept domestically produced oil in the country?
“Having that oil ordered to stay here would only help with supply problems, which we don’t have,” Sinclair said. “The extra oil would not be sufficient to affect price, which is decided by global market forces.”
The same situation would hold true if President Joe Biden ordered more oil released from the U.S. strategic oil reserves, as he did in November.
“Oil from the strategic reserve, again, would affect supply, but wouldn’t do much to change prices,” Sinclair said. “Last time oil was released, it was 50 million barrels, about five days worth of U.S. output, which would have a negligible impact.”
Even without turmoil between Russia and Ukraine, higher prices would still be on the road ahead for drivers in the spring for two reasons, more driving and switching from winter blend gas in about a month, experts said
“With demand poised to increase as the weather warms, (commodity) traders worry that OPEC+ won’t be able to keep up, increasing the value of crude, especially if supply modes are disrupted,” Sinclair said.
The summer blend gas also comes with a price increase.
“Those blends are more difficult to refine and more complicated to distribute, increasing the price,” Sinclair said. “Those blends come at a time when vast numbers of Americans hit the road to enjoy their leisure time.”
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Larry Higgs may be reached at lhiggs@njadvancemedia.com.