Artice: U.S. economy appeared ready to surge, but Russia’s invasion of Ukraine could send Shockwaves (The Washington Post, February 25, 2022)
Russia is a major exporter of oil and natural gas. Some of its supply flows through Ukraine. Gas prices in the US have already risen recently but now with the Russian invasion of Ukraine, world leaders fear that prices will skyrocket in response. President Biden has pleaded with oil and gas companies to not exploit the situation for monetary reasons.
Russia is the United States third largest supplier of petroleum products. On Monday, February 24, the average gas price was $3.54 per gallon in the US. One year ago it was $2.71. The question for the U.S.government is how to navigate the situation to not cause inflation in the U.S. from the situation across the ocean. President Biden has stated that Americans will feel the results of the conflict but he is hoping to control it as much as he can. The rest of the world is watching and trying to avoid major disruptions as well. If all of the major world leaders work together, perhaps they can prevent a major energy crisis happening around the world.
Another negative result from the invasion is the potential of further supply chain disruptions. The Covid pandemic has wreaked havoc on the supply chain in the U.S. for the last two years. The Ukrainian invasion could make it worse. Ukraine exports wheat, fertilizer, corn, sunflower and grapeseed oil. They are also a major neon gas supplier to the U.S. These supplies along with the already computer chip disaster can add more stress to the supply chain all over the globe. These issues can have another impact on American prices and Biden is watching closely. His goal is to use American resources or use his power to eliminate federal gasoline tax temporarily. Not all congressmen are on board but as the war plays out, Biden will determine which direction he needs to lead the American people.
President Biden signed an executive order to ban the import of Russian oil, liquefied natural gas, and coal to the United States. This actions is a consequence of Russia's invasion to Ukraine. Russia, as a biggest oil and gas exporter, will feel this order. However, US consumers are also being impacted by this move.
ReplyDeleteHalf a month has passed since the invasion and the effects of high oil prices are already starting to be felt. I wonder if oil substitutes and other exporters of oil will adapt to this new opening of demand in the oil market.
ReplyDeleteWith the increase in gas prices, I would not be surprised if the U.S. economy gets greener and people start resorting to electric vehicles and resources as a substitute for gas fueled goods.
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