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$4 a gallon gas across US by April? Russia's invasion of Ukraine to drive up prices, experts say

Gas pumps
Posted at 2:07 PM, Feb 24, 2022
and last updated 2022-02-24 16:25:53-05

As global markets react to Russia's invasion of Ukraine, American motorists will be paying more for gasoline, but how much more is as uncertain as the outcome of the conflict now underway in Europe.

"It's going to get worse here for anyone filling their tank up," Patrick De Haan, an oil and gas analyst at GasBuddy, told CBS MoneyWatch. "You could see motorists paying more as soon as later tonight."

Already at a roughly seven-year high, gas prices could rise five to 10 cents per gallon over the next week, and hit $3.75 in the next 15 to 20 days, according to De Haan. "And it doesn't end there — motorists are going to get hit by the Russia situation," which coupled with warmer temperatures and a recovering economy could have the national average topping four bucks a gallon by April, he said.

De Haan believes the odds are better than 50-50 that the nation's record high of $4.10 a gallon will be hit or surpassed in the weeks and months ahead.

A renewed U.S. nuclear deal with Iran "could soften the blow" to gas prices, he added of the negotiations that could lead to an influx of Iranian oil into global markets. A sizable producer of oil and gas, Iran's exports of both are now curtailed by sanctions.

The national average for a gallon of gasoline on Thursday registered at $3.54, according to AAA, up from $3.33 only a month ago. The national average was only $2.66 a year ago, a time when travel demand was capped by the pandemic.

"Prices are going to go up," said Andrew Gross, a public relations manager at AAA. "Will we see $4 a gallon? If you live in California, you've already been seeing it for a long time," Gross said. But if you live in Texas or Oklahoma where gas is selling for $3.20 a gallon, "there's a long way to go," he added.

There is no need for drivers to panic, as people "are not going to wake up tomorrow and not be able to afford gas," stressed Gross. "There's plenty of gasoline, there's plenty of oil. If this war is resolved quickly, you will see prices come back down."

Oil prices have increased more than 40% since December, fueled by speculation of a Russian invasion of Ukraine as troops massed on its borders.

The price of Brent crude jumped nearly 8% this week to almost $101.50 a barrel, marking the global benchmark's first foray into triple digits since 2014. It dipped to $99 Thursday afternoon.

President Biden has acknowledged that the conflict might drive gasoline prices higher, and U.S. businesses have been cautioned to be ready for potential cyberattacks that could further complicate the nation's already stressed supply chains.

"It's not a good time to take anything for granted, we'll see how the next day or two play out," said Carl Weinberg, chief economist at High Frequency Economics. "When you talk about oil prices at $105 a barrel, it troubles me, but it doesn't terrify me. It's a survivable event."

Crude oil prices were above $100 a barrel almost continuously from February 2011 through September 2014, and the sun still "came out every morning," Weinberg said. "Every time oil has been above $100 a barrel — I think three times so far — it's eventually gone back down."

"As of yesterday, there was hope the incursion would be limited to a small region. That hope has now quickly evaporated," said Chris Duncan, a Brandes equity research analyst. "Now we'll see how much economic pain the western world is willing to take."

"There is hope that a line develops, that this is the end of the escalation and we'll put some sanctions in place. But if the line keeps moving, the risk of a significant fallout continues to grow," Duncan said.

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