More pain at the pump: Russian invasion will lead to economic impacts at home

The price for a barrel of crude oil hit $100 for the first time since 2014, and AAA Texas says that means we'll pay more at the pump.
Published: Feb. 25, 2022 at 6:18 AM CST
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WACO, Texas (KWTX) - Russia and Ukraine may be thousands of miles from the United States, but what’s happening overseas will have an impact here at home, and it’s one you may have already noticed.

Dr. Rob Tennant, an assistant professor of accounting at Texas A&M University Central Texas, said the stock market was fluctuating in the days and weeks leading up to the full-scale invasion.

After the invasion, Dr. Tennant said many of the major markets in the U.S. saw enough of a loss that some experts are starting to use terms like correction, which means the market is 10 percent down from the high for the last 52 weeks. The stock market did stabilize some before close on Thursday.

While the invasion is halfway around the world, Dr. Tennant said we are more integrated than ever before, specifically in areas like energy. He said we may not get our crude oil from Russia, but the conflict is affecting crude oil prices, and that means increases for us here at home for everything from groceries to travel costs.

“Pretty much everything you do is likely to experience, at least in the short run, incremental cost increases,” Dr. Tennant said. “That’s on top of all of the inflation and supply chain issues from the pandemic.”

AAA Texas said gas prices were already on the rise before the invasion, but prices are likely to continue to go up in the coming weeks. Daniel Armbruster, spokesperson for AAA Texas, said crude oil prices hit $100 a barrel for the first time since 2014 earlier this week, and that’s the largest driver of what we pay at the pump.

“What happens between Russia and Ukraine has an impact on us right here in Texas, for the simple fact that Russia is one of the top oil producing nations in the world,” Armbruster said. “They have control over a large amount of oil, and of course, oil is not only used for motor vehicle fuel, it’s also used to heat our homes and for many other products that fossil fuels and petroleum make.”

Armbruster said there are concerns that Russia could react to possible sanctions and take some of their oil off the market, causing prices to go up even more.

“This is a situation that has the financial markets watching closely, and there’s concern of course, in regards to supply global supply, at the sense of would Russia potentially react and take some of their crude oil off the global market,” Armbruster said. “The global market is already pretty tight when it comes to supply and demand.”

Armbruster emphasized there are not supply issues here in the United States, but demand does typically increase in the spring as more people begin to travel.

He added some analysts believe gas prices could increase to close to $4 a gallon later this year. Right now, the average price of a gallon of gas in Texas is $3.21, which is among the lowest around the country.

Gas Prices as of Feb. 25
Gas Prices as of Feb. 25(KWTX)

If you’re looking to save at the pump, Armbruster does have some tips. Studies show that your driving habits are the single biggest factor that affects fuel consumption, and there are simple ways to improve fuel efficiency:

  • Slow down and drive the speed limit. Higher speeds result in more aerodynamic drag.
  • Avoid “jackrabbit” starts and hard accelerations. These actions greatly increase fuel consumption.
  • Use cruise control on the highway to help maintain a constant speed and save fuel. However, never use cruise control on slippery roads because a loss of vehicle control could result.
  • Minimize your use of air conditioning.
  • Avoid extended idling to warm up the engine, even in colder temperatures. It’s unnecessary and wastes fuel.
  • Download the AAA App to find the cheapest gas prices near you.
  • Maintain your car according to the manufacturer’s recommendations. Regular service will ensure optimum fuel economy.
  • Make sure your tires are properly maintained and inflated to the correct level.
  • When driving in town, adjust your speed to “time” the traffic lights. This reduces repeated braking and acceleration that consume additional fuel.
  • When approaching a red light or stop sign, take your foot off the gas early and allow your car to coast down to a slower speed until it is time to brake.

At this time, Armbruster said all signs point to prices continuing to go up, and there’s only so much that can be done to stop that because crude oil is a global commodity traded in global markets.

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