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War in Ukraine not the only cause of rising gas prices

Gas prices could reach record highs this week
Posted at 3:09 PM, Mar 08, 2022
and last updated 2022-03-08 15:09:04-05

WEST PALM BEACH, Fla. — Experts say there's likely not a single drop of Russian gas in any of the cars we drive or at the pumps of the stations we fill up.

Sanctions on Russia, the effects of the pandemic and oil companies profiting contribute to gas prices that are close to Florida's record high in July 2008 of $4.08 per gallon.

"I would anticipate that we're going to exceed that record by the end of the week," said AAA Florida spokesman Mark Jenkins. "Maybe even tomorrow."

Jenkins said gas prices were low in the first months of the pandemic because demand was low as many people worked from home and travel plummeted.

Then the dynamic shifted.

Gas prices close to record highs in Florida, AAA says

"Fast-forward to 2021, and all that demand comes roaring back," Jenkins said. "The vaccine is readily available, people are more confident traveling, their flying again. But a lot of the countries are still pumping out oil at the same rate."

Jenkins said it will take time for the U.S. and the other large oil producers to get up to pre-pandemic levels.

The gas in your tank came to South Florida from crude oil drilled in and off the coasts of the U.S. and Canada and sent to refineries on the Gulf Coast.

Russian gas has never been part of the mix here, but the war is affecting prices at the pump.

Gas at a Shell gas station located on Southern Boulevard for $4.39, March 8, 2022
Gas was selling for $4.39 a gallon at a Shell gas station located at Southern Boulevard near Loxahatchee and Royal Palm Beach, Florida, on March 8, 2022.

"With this Ukraine invasion, it's pushing up prices in Europe, said Florida Atlantic University Professor William Luther. "And we have to pay more at the pump here in order to prevent that oil from being shipped to Europe."

The baseline of oil prices is set on what is called the Global Futures Exchange.

Think of it as a speculative stock market for oil and gas where the market determines the cost of gas and where the gas goes.

"If the price of gasoline gets high enough in Europe, suddenly those Canadians starting thinking [that] maybe they should find a way to get the oil over there," Luther added.

Experts said a potential nuclear deal to ease sanctions against Iran will allow that Middle East nation to bring millions of barrels of oil into the worldwide system.

But in the short term, we may experience what we saw last week: Gas prices soaring 26 cents a gallon. It was the biggest weekly jump since AAA began tracking pump prices.