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Will gas prices continue to raise now that Russia is invading Ukraine?

The invasion of Ukraine has pushed the price of oil to its highest price in nearly ten years, providing another squeeze on the cost of living.

Models of oil barrels are seen in front of a displayed rising stock graph and "$100" in this illustration, February 24, 2022.
Dado RuvicReuters

On Friday, Russian troop advances continued to the Ukrainian capital of Kyiv, putting the city under threat just over a day into the conflict. The shockwaves of such a rapid attack are being felt across Europe and the world, with the crisis threatening to further disrupt global supply chains that have already been stretched after two years of a global pandemic.

Russia is the second-largest exporter of crude oil and the largest exporter of natural gas in the world. A disruption as serious as war will, and already is, driving up prices. On day one of the conflict, the price of gas futures jumped by 60 percent, reflecting this immediate impact. The price for oil and gas is only expected to rise, putting Russia in an advantageous position with its market control.

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How the US will be affected by this price rise

The United States is already in the midst of a cost of living crisis, and further disruption in the world oil and gas markets will further exacerbate this. The inflation increase is already 7.5 percent since January 2021; and it will get worse.

The US does not have a huge reliance on Russian oil and gas. The US Energy Information Administration (EIA) has published data for the amount of oil that the US imports. In the month of November 2021, which is the last data set available, the US imported 254,162,000 barrels of oil. From Russia, 17,855,000 barrels were imported, with November's value being the lowest value of the year, but still 7 percent of all imports.

But if the US stopped importing oil from Russia the price would still keep rising. Many other countries have a reliance on Russian gas, with 41 percent of all EU gas coming from Russia. For some in the bloc they import up to 90 percent of all stocks, like Hungary. This reliance will become unsustainable with sanctions against Russia.

What else is affected by rising gas prices?

With such an interconnected world, war between two large nations causes a huge ripple effect. With the price of oil and gas increasing, the price of everythign else will rise as well. Goods must be transported, refrigerated, and stored safely, with all of these processes needing soem form of electrical power to occur. With oil and gas still the primary form of electricity production for much of the world, prices will increase.

Grain is another important factor to consider. Ukraine exports a quarter of the world's wheat supplies, with 40 percent of that going to countries in the Middle East and Africa. A strangling of these exports would be deadly for people already starving in places like Yemen and Tigray, in northern Ethiopia.