Monday, 04 April 2022 15:31

How the War in Ukraine Affects Fuel Prices

russian ukraine war affects fuel pricesNo one uses more fuel than truck drivers and trucking companies. Truckers are watching on the front lines as prices at the pump rise drastically. Increasing gas prices hurt everyone, but they have an especially devastating effect on the trucking industry. The ripple effect is pronounced. The cost to move freight booms, companies seek alternative transportation methods like railroads, and the list goes on.

Fuel prices were already high before the war in Ukraine began. With relaxing COVID-19 restrictions and an economy dealing with supply chain issues, the cost to fill up your tank soared. After Russia invaded Ukraine on February 24, 2022, a bad situation became increasingly worse. Much worse.

Gas prices rose 49.1 cents over the seven days following Russia’s attack on Ukraine, a record-setting increase over that period. This seven-day surge narrowly tops what Americans experienced in the aftermath of Hurricane Katrina, when the price of gas rose 49.0 cents in one week during 2005. 

According to fuel data platform GasBuddy, this unprecedented jump in fuel pushed average United States gas prices to an all-time high of $4.104 per gallon. The last time gas prices were over $4 per gallon was in 2008 right before the Great Recession. At that time, gas prices would have been $5.25 per gallon after adjusting for inflation. Experts predict the national average price of diesel, which is currently $4.63 per gallon, will surpass diesel’s highest price of $4.846 by early April.

Government measures to mitigate these rising costs are taking place at both the state and federal levels. President Joe Biden places blame on oil companies for corporate profiteering, saying in a tweet, “Oil prices are decreasing, gas prices should too. Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31. Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”

Vice President Kamala Harris urged Americans to withstand higher costs at the pump. The United States is abstaining from Russian oil, which previously supplied 8% of the United States oil imports. New sanctions have banned imports from Vladimir Putin’s country because of its aggression in Ukraine. “There is a price to pay for democracy,” says Vice President Harris. “You’ve got to stand with your friends. Sometimes it is difficult. Often, it ain’t easy.”

States Take Aim at the Pump

States are beginning to take matters into their own hands. Three states, Maryland, Georgia, and Connecticut, have placed temporary suspensions on gas taxes. More states will likely follow their lead.

  • Maryland legislators have eliminated their state gas tax for 30 days, saving Marylanders 36.1 cents per gallon.
  • Georgians will save 29.1 cents per gallon while their state gas tax is eliminated until May 31.
  • In Connecticut, a measure backed by bi-partisan support lifted the state's 25-cents-per-gallon motor vehicle tax through June 30, saving drivers an estimated $90 million.

Maryland Governor Larry Hogan says, “This bipartisan action will provide some relief from the pain at the pump and it is possible because of the prudent fiscal steps we have taken, which have resulted in a record budget surplus. This is, of course, not a cure-all, and market instability will continue to lead to fluctuations in prices.” The state of Maryland stands to lose nearly $100 million in revenue over the next month due to this tax stoppage.

Similar sentiments came from Georgia Governor Brian Kemp. “Today, I signed HB 304 to temporarily halt collection of the state gas tax and ease the burden consumers are feeling at the pump. We can’t fix everything that Washington has broken, but we are doing our part to lessen the impact on your wallet.”

There are growing calls from citizens and politicians for a national hold on gas taxes. The federal fuel tax is roughly 18.3 cents per gallon for gasoline and roughly 24.3 cents per gallon for diesel. On a 15-gallon tank, Americans would save about $2.75 each time they fill their car up with gas and $3.65 each time they fill up with diesel.

Senator Mark Kelly from Arizona sponsored the Gas Prices Relief Act of 2022, which would provide a temporary exemption from the excise tax on gasoline through the rest of calendar year 2022. The bill is currently under deliberation in the United States Senate Committee on Finance. It has yet to be voted on by either the Senate or the House of Representatives.

Release of oil Reserves

On March 31, in an unprecedented move to attack rising fuel prices and growing inflation,  President Joe Biden announced the United States will release one million barrels of oil per day from its strategic petroleum reserves for the next six months. This release is designed to bridge the gap created by the U.S. ban of Russian oil imports, allowing domestic producers to ramp up production.

While it remains unknown what effect this release of oil reserves will have on pricing overall, it is sure to provide a measure of short-term relief while continued efforts are taken both domestically and internationally to address the crisis.

Truckers always need to be cognizant of transportation costs, but that’s true now more than ever. Protect yourself and your company;  learn important budgeting tips for truck drivers and insider tips on how to improve fuel-efficient truck driving.

 

Last modified on Wednesday, 13 April 2022 11:09
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Authored By:

Tyson Williams

Tyson Williams

Tyson Williams is a CDLjobs.com freelance writer and social media marketer. He graduated magna cum laude from Cornell College with degrees in political science and secondary education and is attending law school at the University of Iowa College of Law.