Gas Prices: Why Russia's Invasion Of Ukraine Will Increase Your Costs At The Pump

The initial surge in crude oil prices following Russia's invasion of Ukraine on Thursday subsided late in the day, and drivers and analysts now have some optimism that the Ukraine conflict may not have as big of an impact at the pump as some had feared.

Oil Volatility: After trading as high as $98.86 per barrel on Thursday morning, WTI crude oil prices were back down to $92.14 on Friday after the market digested the impact of the Russian aggression and the new round of sanctions imposed on Russia by the U.S. and other nations.

Related Link: How The Markets Are Reacting To Russia's Invasion Of Ukraine

The national average gasoline price on Friday is $3.572 per gallon, up 4.4 cents from a week ago. At one point on Thursday, gasoline spot prices were up 17 cents on the day.

Still, gasoline prices continue to steadily rise in 2022, and the Ukraine conflict is likely to exacerbate the situation. U.S. gas prices averaged just $2.678/gal a year ago.

Russia's Impact: Russia is the second-largest oil producer in the world behind only the U.S. About 7% of U.S. gross petroleum imports come from Russia, and the U.S. gets about 3% of its oil from Russia.

While oil and gas prices pulled back from highs on Thursday, the Oil Price Information Service is projecting U.S. average gas prices will hit $4/gal in the second quarter of 2022.

GasBuddy analyst Patrick De Haan said Friday that yesterday's U.S. gasoline demand was the second-highest ever recorded for a Thursday.

"According to GasBuddy data, Thursday U.S. gasoline demand surged 17.3% from the prior Thursday and was 21.1% above the average of the last four Thursdays," De Haan said.

"It's a good sign that the large jump in oil this morning has faded, and offers a glimmer of hope that increases in coming weeks and months may not be as astronomical as feared, but the situation remains fluid," he said on Thursday.

The United States Oil ETF USO traded slightly lower on Friday and is well off its Thursday morning peak levels, but it remains up 4% overall in the past five days and 54.6% in the last year. The United States Gasoline Fund LP UGA is up 5% in the last five days and 60.2% in the last year.

Benzinga's Take: It's certainly irritating to U.S. drivers that gas prices have risen by nearly 90 cents per gallon in the last year, especially with spring and summer travel season just around the corner. Unfortunately, those prices will likely continue to rise in the near-term, but the Oil Price Information Service is projecting gas prices will fall back to $3.30/gal in the second half of 2022.