How High Will U.S. Gas Prices Climb After the Invasion of Ukraine?

As the Ukraine crisis continues to unfold, gas prices are likely to go much higher.

Since Russia’s invasion of Ukraine, the price of gas has increased by 12 cents in one week, and the national average for a gallon of regular gas increased to $3.65 Wednesday. Oil prices were already on the rise due to supply chain issues stemming from the pandemic.

The crisis in Ukraine has further exacerbated concern that oil production in Russia may eventually be sanctioned. Prices on Wednesday, according to AAA, averaged $4.86 a gallon in California, and are past the $4 mark in Oregon, Nevada, Washington, and Hawaii.

How high will gas prices go?

Russia is the world’s largest exporter of oil to global markets, and the second-largest crude oil exporter (behind Saudi Arabia). Further sanctions may impact access to Russia’s oil, making the already soaring prices go higher.

With five states already crossing the $4 threshold, as oil supply decreases and demand continues to grow post-pandemic, oil prices may surpass the national record of $4.11 set in July 2008.

Gas prices historically go up anywhere from $0.25 to $0.75 by Memorial Day, an additional factor beyond the unstable situation in Ukraine. With the current trend in gas prices, inflation at an all-time high, and taking seasonality into account, gas prices may top $5 per gallon.

How long will prices be at a high?

Like the stock market, the oil market responds poorly to volatility. Prior to the conflict, gas prices were on the rise due to inflation and supply issues from the pandemic. According to the International Energy Agency, so far, Russia’s invasion of Ukraine has not resulted in a loss of oil to the market.

Economic sanctions imposed by the U.S. and NATO against Russia have not yet been extended to oil. Due to Russia’s outsized role in global oil markets, future sanctions, however, may reduce the availability of its oil.

High energy prices also drive inflation. This perfect storm of supply-chain issues, inflation, and the Ukrainian crisis could cause oil prices to remain high for the foreseeable future.

What options do drivers have?

As of Wednesday, gas reached as high as $5.65 a gallon in Mono County, California. With prices potentially reaching record levels, it is important to budget for higher costs and avoid unnecessary trips. If you can, shift to a car with better gas mileage, or consider an electric vehicle.

There are also credit cards with cash back rewards for gas purchases. These rewards can help offset the increase in prices. It's also worth considering loyalty programs available at some gas station chains.