Gas prices climbing in the Tri-State
(WFIE) - The United States is barring Russian oil from entering the country.
President Biden said the decision is the next step in holding Russia accountable for its invasion of Ukraine.
We spoke with financial experts at Old National Bank, who tell us what the barring or Russian oil will mean for the Tri-State.
Right now, experts say the world’s energy supply is in an imbalance.
There have been shortages of oil, now predominantly from Russia, following President Biden’s ban on Russian oil imports.
Our local experts say until this all gets resolved, we could see gas prices climbing to levels we haven’t seen before.
Maybe even into the $6 a gallon range locally.
But to be clear, if levels did reach those all-time highs, experts say that would be very temporary.
They say it takes a while for U.S. oil producers to make up for that shortfall and bring that production back online.
“When you ban the import of Russian oil, it will cause a shortfall in the amount of oil that’s available to be refined into gasoline, plastics, other commodities, and until or unless US energy producers can make up that shortfall, which will take a while,” said Matt Finn, chief economist at Old National Bank. “They’ll have to bring oil rigs back online. They’ll have to explore for new production, and that could take, again months or even years, to bring that replaced production back online.”
These rising gas prices, unfortunately, creep into every part of society.
Experts say delivery drivers and the cost of getting goods around the country will be affected by this, and that’s just a couple of examples.
Unfortunately, those experts do say, a rise in gas prices also means a rise in inflation.
A silver lining, however, if you could take one away from the coronavirus Pandemic is that many Americans have adapted to working from home.
Our local experts say the rise in gas prices could lead to more working from home solutions to reduce commuting costs and consumption.
It’s those kinds of alternatives that experts say Americans might start looking for.
”It took a while but back in the 1970s, you may not remember, but many of your viewers would, that people started searching for cars that got better gas mileage,” Finn said. “They started trading in their cars that had big V8 engines and started getting cars with better gas mileage. Consumers will do the same thing. Maybe explore more work from home technologies and even the sale of electric vehicles. We might start to see an increase there over time. It just depends on how long these high gas prices persist.”
With gas prices, travel expenses, and inflation increasing, how do you budget for all of this?
Our local experts say it’s a tough question but the answer is making tough choices.
Many times people will seek alternative cheaper options, but since there really isn’t in the case of gasoline, people may start looking at those discretionary choices.
Like putting off certain bills or not buying that patio furniture you were planning for or even food choices.
Experts say the key to this is discipline.
They say the good news is Indiana tends to be about 15 cents per gallon less than the national gas price average.
Unfortunately, those experts say we could feel the effects of all of this even in our grocery stores.
“Russia and Ukraine account for about 25 percent of global wheat production,” Finn said. “So that’s being destabilized and the price of wheat has rocketed in the last several days. That’s an input cost into most of the food we eat. Cereals, breads all of that. So that’s going to cause price pressures in the grocery stores as well. That’s coming.”
Finn says getting away from our reliance on oil will take a long time.
So short-term solution is ramping up energy production, but long term is looking for alternatives to being so dependent on oil.
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