If you haven’t filled up your gas tank in a week or two, you may be in for a shock.
Gas prices in Massachusetts have soared in recent days, reaching an all-time high of $4.24 on average a gallon on Tuesday, according to AAA. That’s a 61-cent jump just in the last week, as the economic impact of the war in Ukraine and the broad Western sanctions on Russia take hold on top of inflation.
“We’re in uncharted waters,” said Mark Schieldrop, a spokesperson for AAA Northeast. “It’s beginning to hit people’s budgets, and there’s no end in sight.”
Gas prices closely track the cost of oil, and a barrel of Brent crude has jumped 17 percent since Russia launched its invasion on Feb. 24, hitting $123 Monday. In early December, that same barrel cost about $65.
It’s prompting unprecedented prices at the pump. (Though it’s worth noting, when adjusted for inflation, gas prices hovered around $4.50 a gallon in today’s dollars from 2011 to 2014, and topped $5 for a time in 2008.) At the Fenway Park Shell and at Brookline Sunoco, a gallon went for $4.39 on Monday. Shell stations in Cambridge — $4.19 — and Allston — $3.99 — were a bit lower.
It’s a “no-win” situation, said Sara Doyle as she filled up at the Shell on Boylston Street in the Fenway. She routinely commutes from Andover into Boston for work, and is faced with the choice between paying higher rent to live closer to her job or spending more on gas to drive there.
“It does make me anxious,” Doyle said. “It’s not like some gas stations are super cheap and others are expensive. The prices are high everywhere.”
The spike illustrates one way the war in Ukraine and the West’s aggressive economic response are altering the economy.
Though Russia can still export oil, some refineries and traders have stopped buying it to avoid violating economic sanctions or to show support for Ukraine. Last week, Shell, BP, and ExxonMobile limited their operations in the country.
But there’s no actual shortage of fuel in the United States, or likely risk of one. While Russia provides a tenth of the world’s oil — and more than one-third of the natural gas consumed in the European Union — only about 3 percent of US oil comes from there.
“No one is running out of gas in the States,” Schieldrop said. “There’s plenty out there for people to buy. It is just more expensive.”
Even an outright ban on Russian oil, which President Biden enacted Tuesday, would do little to change the dynamic for US consumers, economists said. Energy traders in the US and Europe already have priced such a ban into their math. And even if the West cuts Russia off, they’ll sell to China and other markets instead.
“If other countries are still willing to buy Russian oil, all that’s going to happen is a reshuffling of global oil supply with a change in the quantity,” said Steve Cicala, an economics professor at Tufts University.
Instead, the consequences may be worse for Europe, which has grown more dependent on Russian oil in recent years. That gave Russian President Vladimir Putin leverage in the lead-up to this conflict — leverage he still has today.
“They were sleepwalking into a propeller” by importing more Russian oil, said Brian Bethune, an economics professor at Boston College. “And in this case, the propeller is Putin.”
In the US, gas prices have been climbing for other reasons, chiefly the supply and demand shocks of the COVID pandemic.
Early in the pandemic, the oil industry suffered when prices collapsed and some producers went bankrupt, said Bethune. A cyberattack on the Colonial pipeline and disruptions to the Keystone pipeline created infrastructure issues that rattled through the industry, he added.
For the two years since, oil and rig activity has “been in slow-motion recovery,” Bethune said.
But it translates into higher prices for consumers, and for the cost of many goods that need to be shipped by truck or plane. Indeed, energy costs have been a key driver of the last year’s steep inflation — which has many households adjusting their budgets, skipping leisure activities, and in some cases, cutting back on essentials.
Higher fuel costs also feed inflation, which already sits at a 40-year high. The consumer price index rose by 7.9 percent in the year through February, and last week, Federal Reserve chair Jerome Powell warned that the war will only make all this worse.
It’s already difficult for Nick Bolster, who travels regularly for work. He drove into Boston from Cohasset Monday with his baby daughter in tow and filled up his BMW X5 at the Fenway Park Shell.
“I feel like I’m filling up every single day, putting 30 bucks in my car [each way] every day,” he added.
Still, Doyle said, painful as the price of gas might be right now, it’s nothing like the pain being felt in Ukraine. He’s willing to pay it to support the people there.
“Is it worth an extra dollar of my gas? Yes,” said Doyle. “It’s obvious we need to support Ukraine, and do everything we can to help the humanitarian crisis. That would be worth any amount of money, in my opinion.”