Gas prices continue to surge to unprecedented heights as Western governments ramp up sanctions against oil-rich Russia for its assault on neighboring Ukraine.
On Wednesday, the average price of regular unleaded gas in the United States hit $4.67 per gallon, according to AAA, setting the latest record since Russia launched its invasion earlier this year. A year ago, the average price at the pump was around $3 per gallon.
The most recent spike follows the European Union’s agreement on May 30 to ban around 90% of Russian oil imports by the end of the year as part of a new set of sanctions targeting the country’s state broadcasters and largest bank.
“This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine,” Charles Michel, president of the European Council, said on Twitter. “Maximum pressure on Russia to end the war.”
The new sanctions and their consequences underscore the world’s reliance on Russian energy until this point and the West’s continuing resolve to end the Russian invasion by all means, except engaging directly in military battle.
Though the U.S. and other countries have supplied Ukraine with essential weapons and defense systems, Western allies have so far refused to send in their troops, citing the fear of unleashing a large-scale conflict involving the world’s most significant nuclear powers. Ukrainian forces have succeeded in repelling the much larger Russian military in many places, but brutal fighting continues in the country’s eastern cities.
The price of goods such as food and fuel was already rising in the U.S. and abroad due to inflation before the Russian attack began in late February. Still, prices at the pump have skyrocketed since then as sanctions limited the global oil supply.
The latest sanctions, Europe’s sixth round of measures to support Ukraine, come after similar bans in recent months by North American leaders on Russian energy products. In March, President Joe Biden issued an executive order banning Russian oil, coal, and liquefied natural gas. Europe, which is far more dependent on Russian oil than the U.S., said it needed additional time to secure other sources.
“The United States is able to take this step because of our strong domestic energy infrastructure, and we recognize that not all of our allies and partners are currently in a position to join us,” the White House said at the time.
The EU’s new set of sanctions bans Russian oil imports by sea but not by pipeline because landlocked countries such as Hungary still rely heavily on the Soviet-era Druzhba pipeline from Russia and needed to sign on to the sanctions.
“This is an important step forward,” said Ursula von der Leyen, president of the European Commission, after leaders agreed on the latest measures. “We will soon return to the issue of the remaining 10% of pipeline oil.”
The day after the agreement, the price of Brent crude oil, the global benchmark, jumped to more than $123 per barrel, while West Texas Intermediate hit $119, approaching a decade high. Consumers across the U.S. have since seen prices at the pump jump in response.
Other measures in the EU’s package include removing Sberbank, Russia’s biggest lender, from SWIFT, the Society for Worldwide Interbank Financial Telecommunication. The U.S. and EU previously banned smaller Russian banks from the global financial transactions system.
“The Sberbank is the biggest Russian bank, with 37% of the Russian banking sector,” von der Leyen said. “So this is good that we now de-SWIFT the Sberbank.”
Von der Leyen added, “And, very important, there is the suspension of broadcasting in the European Union of three further Russian state outlets that were very typically spreading broadly the misinformation that we have witnessed over the last weeks and months.”
The EU is also working to send 9 billion euros in financial aid to Ukraine to accompany $9.5 billion in new support from the G-7, including $7.5 billion from the U.S., she said.
“And my last point, but a very important one, too — we discussed intensively the question of the reconstruction of Ukraine,” von der Leyen added. “Here, we all know that we will invest. We will have a large amount of work, colossal, as [Ukrainian] President [Volodymyr] Zelensky said, for the reconstruction of Ukraine.”
She said rebuilding Ukraine must come with reforms in the country “to fight corruption” and support “judicial independence.”
“Here, it is important that we really stand together to give Ukraine a fair chance to rise from the ashes and to be able to really leapfrog forward what reconstruction is concerned in investment but also in the improvement of the state of Ukraine,” she said.
For now, with no clear end to the battle in sight, fuel prices are expected to not only remain high but rise further in the months ahead. As motorists across the U.S. gear up for summer travel, some analysts say the average price of gas nationwide could soon top $6 per gallon.
“With expectations of strong driving demand — traditionally, the U.S. summer driving season starts on Memorial Day, which lands this year on May 30, and lasts until Labor Day in early September — U.S. retail price could surge another 37% by August to a $6.20/gallon national average,” said Natasha Kaneva, head of global commodities research at JPMorgan, CBS News reported.
In California, the average price is already above $6 per gallon. On May 31, Rep. Adam Schiff (D-CA), who represents part of Los Angeles, introduced a bill to suspend the federal gas tax, which sits at just over 18%, until the end of next year.
The federal tax makes up 12% of what consumers pay for gas, according to the U.S. Energy Information Administration, and funds road infrastructure. Schiff said the government could recoup that funding by taxing oil companies.
“For months now, a combination of Vladimir Putin’s invasion of Ukraine, ongoing supply chain issues, and price gouging by the oil companies have been steadily driving up the price of gasoline to more than $4.50 a gallon nationwide and more than $6 a gallon here in Los Angeles,” Schiff said during a press conference. “Yet in spite of this volatility, one thing has remained the same: Big Oil’s skyrocketing profits. This is exploitation, plain and simple, and it’s unacceptable to all of the people who are having to spend hundreds of dollars more every month just to go about their daily lives at a time when so many are already struggling to make ends meet.”
Some states have considered similar measures to ease consumers’ pain at the pumps. In New York, where the average is nearing $5 per gallon, legislators passed a state gas tax suspension that took effect Wednesday and will continue until the end of the year.
At the federal level, Biden announced at the end of March that the U.S. would tap into the Strategic Petroleum Reserve to release an average of a million additional barrels of oil to the market per day for the following six months.
“The scale of this release is unprecedented: The world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House said. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
But as the Russian assault wears on, fuel prices have continued to rise. “There is the temptation to think an American politician can do something,” Patrick De Haan, an analyst for GasBuddy, told CBS News. “But they don’t have control over the global levers of supply and demand.”
