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Oil prices soar amid invasion of Ukraine
FOX 26 Business Reporter Tom Zizka has more as the price of oil is increasing and how you'll feel it at the pump.
HOUSTON - Lawmakers in Washington, including Texas Senator Ted Cruz, are now pushing to ban the import of Russian oil as that country's siege against Ukraine continues. Whether such a ban is successful, or not, the rising cost of crude will be felt by everyone.
Just a week after the invasion, crude was selling at $115 a barrel, the highest since the summer of 2014. Russia's economy is heavily reliant on oil, providing about 8% of the global supply, so the instability is what's pushing prices higher.
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For most consumers, the hike will be immediately felt at the gas pump. AAA says prices have risen 39 cents in the last month, and 25 cents since hostilities began. The organization says the current price-hike will take an extra thousand dollars from the average household budget.
Houston energy analyst Andy Lipow expects gas prices to rise another 40 cents a gallon, before there's a chance of calm, and any worsening conflict could send those prices even higher. He says, even without an official ban on Russian oil, the market is getting smaller and smaller,
"What is interesting is the rapid rate that the oil industry has turned away from Russian supplies. They are now toxic."
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Last year, the U.S. imported just over 700,000 barrels of oil and petroleum products from Russia. It's not a lot, but as energy giants BP, Shell, Exxon-Mobil, and others, have moved to divest themselves from the Russian oil industry, access to those vast resources may remain limited for years to come, leaving higher prices for fuel and petroleum-based products with little relief in sight.
"The tensions between Russia and Ukraine are going to take a long time to sort out," says Lipow. "This industry is deciding that Russia is not a stable geopolitical place to do business."
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Higher oil prices are likely to encourage investment in renewed domestic drilling, says Lipow, which would put people back to work in the oil patch. At the same time, the same higher prices could also close the gap to making expensive renewable energy sources, like wind and solar, suddenly more affordable.