Russia and Ukraine may feel far away, but the invasion – and the uncertainty around political affairs and world markets – can be felt all the way here in Delaware.
Look no farther than the gas pumps.
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Russia is one of the world’s leading exporters of crude oil, behind only the United States and Saudi Arabia. In 2021, Russian exports of crude oil added up to over $110 billion.
About 50% to 60% of every gallon of gasoline is made from crude oil, said Jana Tidwell, manager of public and government affairs for the American Automobile Association Mid-Atlantic. When the price of crude oil increases, gas prices almost always follow suit.
Thursday morning, as the invasion began, the price of crude oil surpassed $105 per barrel, the highest it has been since October 2014.
As international sanctions continue to be placed against Russia by the United States and its allies, experts predict that Russia may withhold its crude oil products from the world market, which would cause gas prices to further increase.
“The United States does not import a lot of oil from Russia,” Tidwell said. “However, Russia itself is a player in the oil-exporting market. If they choose to withhold oil from the global market, such a move would eventually be reflected in higher gas prices for American drivers, even higher than they are now.”
According to the U.S. Energy Information Administration, the average cost of a gallon of regular gasoline in the United States is around $3.53 per gallon, more than 85% higher than last year. At $3.58, Delaware’s average price per gallon is the 15th highest in the country, according to Gas Buddy, which tracks prices.
According to Tidwell, Delaware’s $3.58 average price of regular gasoline is an increase of $0.97 per gallon from this time last year.
“The situation will likely not get better,” Tidwell said. “Demand has been gradually increasing since the beginning of the pandemic, and the world supplies have been struggling to keep up.”
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In addition to the impact that sanctions against Russia will have on gas prices, the transition into spring and summer will also cause a spike in gas prices.
“Demand typically tapers off in the winter months,” Tidwell said. “But we’re coming out of winter months so we’re going to start seeing an increase in demand.”
As mandated by the EPA, gasoline must transition to a summer blend by June 1 in order to decrease the volatility of the substance in the warmer weather. This gasoline is more expensive to produce.
“The unfortunate part about that is consumers will feel that impact as well,” Tidwell said. “The summer blended gasoline typically adds $0.15 per gallon.”
Delaware’s record-high gas price was $4.06 per gallon on June 18, 2008.
While the state remains about 48 cents below that, geopolitical tensions may send crude oil and gasoline prices closer and closer to that Delaware record.
Contact Molly McVety at MMcVety@delawareonline.com.
