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“It’s a step we’re taking to inflict more pain on Putin, but there will also be a cost here in the United States,” President Biden said. “I said I would agree with the American people from the start and when I first spoke about it, I said standing up for freedom will cost. It will cost us in the United States as well.”
Experts say the sanction will cause local gas prices to rise, but by how much? It could be more than some had anticipated.
We told you last week that California was the first state to average $5 a gallon. We’re currently sitting at an average of $5.45, higher than other states, which experts say is due to gasoline taxes and other factors. But, this last sanction could bring it even higher.
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“We’re at an all-time high in the US, but it’s not just a US problem,” said Patrick De Haan, head of oil analysis at GasBuddy.com. “It’s a global phenomenon. It’s not just us in this boat, every country that consumes gasoline is seeing the prices go up dramatically. I’m a little concerned that California might hit the $6 average. the gallon.”
De Haan said in a Facebook Live today that our gas usage and the cost of gas for stations are driving up prices.
It’s like the housing market – supply drives demand and gas costs more.
Fortunately, Matthew Holian, a professor of economics at San Jose State University, said many oil companies had reduced the use of Russian oil in preparation for these sanctions.
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He is only hoping for a modest price increase.
“We don’t import a lot of Russian oil,” Holian said. “I think it’s in the single digits in terms of the fraction of oil we import. So effectively it’s not a big hit to our supply.”
Both experts expect the pace of price increases to slow. But that could change if new sanctions come from other countries.
“If other countries stopped importing Russian oil, it would push up the price of oil even more,” Holian said.
“If the EU cut off Russian energy, it would cause an absolute explosion in the cost of oil,” De Haan said.
DeHaan added that shouldn’t happen, but US sanctions will still be felt at the pumps in the coming days.
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