gas prices

As Biden Announces Ban on Russian Oil, Here's What Could Happen With Gas Prices

Everyone wants relief on gas prices, which have skyrocketed in recent weeks. The head of petroleum analysis at GasBuddy, a leading fuel saving platform in North America, weighs in on whether it'll come any time soon.

Americans have seen a sharp rise in gas prices for 10 straight weeks, according to data collected by GasBuddy. On Monday, the U.S. broke its all-time high for the national average of gas prices, hitting $4.104 per gallon. Just three days before, the national average was at $3.781 per gallon, and San Francisco became the first U.S. city to average above $5 a gallon for gas.

We’ve been through this before, for example in 2008 amid the Great Recession. But experts say this current upsurge is the result of a perfect storm — from the Russia-Ukraine crisis to ever-shifting demand for gas during the pandemic. Tuesday, President Joe Biden announced a ban on all imports of Russian oil and gas, which could push energy prices even higher. "That means Russian oil will no longer be accepted in U.S. ports," Biden said.

NBCLX storyteller Cody Broadway interviewed Patrick De Haan, head of petroleum analysis at GasBuddy, about what to expect in the coming months and why Californians are paying more at the pump than anyone else in the country.

The following interview has been edited and condensed for clarity.

NBCLX: What's happened with gas prices since the Russia-Ukraine conflict?

Patrick De Haan: Russia is the second-largest oil producer globally, producing 10 million barrels a day of oil. The sanctions from many Western countries have essentially acted as a sanction on Russia's energy by making it very difficult for financial transactions to occur for oil. There are de facto sanctions now on Russia's energy sector, which has caused the price of oil to skyrocket.

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What immediate impact will the U.S. ban Russian oil have on gas prices?

A continued rise in gas prices will persist, and while this decision might alarm some, it was rumored to come before. It won't have a drastic impact but will contribute to a continued rise in gas prices and diesel.

How have the past two years of the pandemic affected rising gas prices?

It is a unique situation with a lot of different factors coming together to create this perfect storm. Mask mandates are being reduced, giving Americans the confidence to get back outside after winter, so demand has gone up over winter as the crisis has eased. Imbalances brought on by the pandemic caused Americans to basically stop driving in 2020. They returned to the roads in 2021, and now demand is nearing pre-COVID levels. It was just enough of an interruption in normal demand, causing prices to now slingshot higher as oil production has lagged behind demand, and that's the big problem we face. Much of what we've seen recently in the last month or two could be tied to Russia, but much of the imbalance between this year and last year is largely due to the pandemic.

Why are gas prices so high in California especially?

California has got the nation's highest gasoline taxes. It essentially pushes down to the individual consumer the cost of emissions to the tune of an additional 20 to 25 cents a gallon. California has its own unique blend of gasoline mandated by the Air Resources Board, so having a different kind of fuel than the rest of the nation also adds to the cost of the uniqueness of that blend of fuel and the state's stringent guidelines. Refiners make the cost of doing business much higher, and all of that goes into California, leading the nation with the highest gasoline prices.

What's going to happen next with gas prices?

Unfortunately, I don't think the situation is going to improve anytime soon. The Russia situation could potentially worsen, and we're on the road to the summer driving season, which means that prices generally go up as much of this transition from winter to summer gasoline takes effect. Because of the war ongoing in Ukraine, it could and likely will get much worse before it gets any better.

What do you predict gas prices will be over the next six months?

It's possible the Bay Area could peak at an average of $5.50 to $5.75, and Southern California could be just under 10 or so cents under that, $5.35 to $5.65. It's going to be a very pricey summer driving season, and all it's going to take to push prices higher is one unexpected refinery issue, and we generally see those.

What are some solutions to the rising gas prices?

There aren't a whole lot of good solutions. Russia is one of the largest oil producers, and there's no way to quickly replace the capacity that they have. There's long-term things that the president could do. There's the possibility that the U.S. may sign a new nuclear pact with Iran. A new nuclear pact would likely ease the sanctions on Iran's energy sector and allow their 2 million barrels of oil to start being sold on the global market. That could stunt the impact of losing Russia's 10 million barrels. But again, it's certainly not going to come close to offsetting. Other countries like Saudi Arabia and the United Arab Emirates could also raise production, but so far, they have resisted that.