With household budgets already stretched to the limits, a prolonged conflict in Ukraine has many feeling anxious.
As Russian tanks rolled across the border of Ukraine and long range missiles hit targets the world was rightly focused on the humanitarian fall out of Russia's cross border excursion into Ukraine Thursday. But as Ukranian resistance mounts and the prospects of a longer conflict increase, what does that mean for Southern California's fuel prices, which already hit record highs this week?
Average gas prices in San Diego hit $4.67 this week in San Diego and $4.87 in Los Angeles.
Basic supply and demand says that any supply shock, like the nation with the 8th largest oil reserves starting a European war, will dramatically increase prices, even given steady demand. While demand has been anything but steady following the COVID-19 pandemic, it has been increasing.
U.S. sanctions against Russia for its annexation of territory in addition to Crimea could drive up gas prices in Southern California if the conflict drags on into the spring and summer, and sanctions are enforced in the oil market, say energy experts.
The United States on Thursday imposed visa bans and asset freezes on top Russian officials and lawmakers as well as a bank that is the personal bank of President Vladimir Putin.
In response, Russia's Foreign Ministry vowed to retaliate against the U.S., raising fears that the conflict would drag on long enough to affect world oil supplies this summer. With Russia facing the real possibility of being cut off from the SWIFT interbank transfer protocol, the likelihood of anything resembling normalcy in energy markets seems a distant reality.
As is often the case, Southern California consumers and household budgets will likely bear the negative financial consequences of international energy market turmoil. While nothing compared to the devastating toll facing the citizens of Ukraine, anxiety around dinner tables in the Southland is palpable.