'Perfect storm' at the pump as Russia conflict causes gas price spike

Staff and wire reports

Gas prices are spiking across the region amid conflict in Ukraine that threatens a source of global crude oil.

The average cost of a gallon of gas increased at least 3 cents in the past week in the York area, hitting an average of $3.78, according to GasBuddy, a firm that tracks gas prices.

“The Russian invasion of Ukraine has sparked high level concern that oil production could eventually be stifled, or even sanctioned, from the world’s second largest oil producer, leading to less supply as demand grows," said Patrick De Haan, head of petroleum analysis at GasBuddy.

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Those rising prices are unlikely to abate, De Haan said, due to the seasonal increase of between 25 and 75 cents per gallon that typically happens in the lead-up to Memorial Day.

"It’s simply looking like a perfect storm for motorists at the pump, with little to no relief anytime soon," he said.

According to GasBuddy, the median U.S. gas price is $3.49 per gallon, up 10 cents from last week and about 10 cents lower than the national average.

The states with the lowest average prices are Arkansas ($3.21), Mississippi ($3.24) and Oklahoma ($3.25). The highest are California ($4.80), Hawaii ($4.52) and Nevada ($4.02).

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Oil prices soared Tuesday and investors shifted more money into ultra-safe U.S. government bonds as Russia stepped up its war on Ukraine.

Stocks fell following a volatile day for major indexes as investors tried to measure how the conflict will impact the global economy. The S&P 500 index fell 0.7% as of 10:14 a.m. Eastern. The Dow Jones Industrial Average fell 337 points, or 1%, to 33,554 and the Nasdaq fell 0.5%.

The bigger moves came from the markets for oil, agricultural commodities and government bonds. Oil has been a key concern because Russia is one of the world’s largest energy producers. The latest bump in prices increases pressure on persistently high inflation that threatens households around the world.

U.S. benchmark crude oil prices rose 6.6% to $101.87 per barrel, reaching the highest price since 2014. Brent crude, the international standard, rose 6.6% to $104.44.

Russia's invasion of Ukraine has also put more pressure on agricultural commodity prices, which were also already getting pushed higher with rising inflation. Wheat and corn prices rose more than 4% per bushel and are already up more than 20% so far this year. Ukraine is a key exporter of both crops.

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Investors continued putting money into bonds. The yield on the 10-year Treasury fell to 1.75% from 1.83% late Monday. It is now back to where it was in early February, before topping 2% for the first time in over two years.

The conflict in Ukraine has shaken markets globally and added to worries about economic growth in the face of rising inflation and plans from central banks to raise interest rates. The U.S. and its allies have been putting significant pressure on Russia's financial system as that nation continues its push into Ukraine and its key cities.

The value of the Russian ruble plunged to a record low Monday after Western countries moved to block some Russian banks from a key global payments system. Also Monday, the U.S. Treasury Department announced more sanctions against Russia’s central bank.

Various companies have announced plans to scale back or pull out from ventures in Russia, or to suspend operations in Ukraine due to the conflict. The Russian central bank has raised its key rate to 20% from 9.5% in a desperate attempt to shore up the plummeting ruble and prevent a run on banks. Russia's stock market remained closed on Tuesday.

Investors are closely monitoring developments in Ukraine while awaiting the latest updates from the Fed and U.S. government on the economy. Fed Chair Jerome Powell is to testify before Congress later this week and that could offer clues on the path ahead for raising interest rates. A report on Friday will also show whether strength in the U.S. jobs market continued in February, allowing the Fed more leeway to raise rates.

The Associated Press contributed to this report.