Russia's invasion of Ukraine could lead to higher prices for Midwest motorists and farmers
An energy expert in Bloomington says Russia's invasion of Ukraine could soon lead to higher prices at the pump.
Scott Wilson is an energy customer risk manager at the agriculture cooperative company Growmark. Wilson said Thursday that crude oil was trading at more than $100 per barrel for the first time since 2014 after Russia began to attack its neighbor.
“(With) this invasion, you could definitely see Midwest gas prices approaching $4 (per gallon) in the short to midterm,” said Wilson, adding the summer blend already was likely to hike gas prices by 10 cents to 15 cents a gallon.
Wilson said sanctions have avoided Russia's energy exports to prevent more severe price spikes. He said if Russia pulls back on oil and gas exports in retaliation, those prices could rise further and could lead more countries to turn to the U.S. for natural gas, or find cheaper alternatives such as heating oil and propane.
“I think if this keeps going on that’s probably going to happen, you are probably going to see some supply disruptions from Russia with energy products and other commodities as well,” Wilson explained.
Russia's invasion of Ukraine also could force farmers to pay more for fertilizer this year.
Kreg Ruhl manages crop nutrients at Growmark. Ruhl said Russia is a major exporter of crop nutrients around the world, even though it's mostly to China, India and Brazil.
He said if Russia starts to pull back on exports, the effect on prices will be felt globally.
“American growers were already facing the highest nitrogen prices they have already seen in their entire lives and now it added civil unrest on top of that,” Ruhl said.
He said the cost of natural gas has fluctuated dramatically going back to late fall, when Germany initially suspended approval of the Nord Stream 2 gas pipeline.
“The natural gas price in Europe has reached record highs and that has rippled into the nitrogen complex in our business significantly,” Ruhl said.
Germany suspended certification of the pipeline this week after Russia recognized two separatist regions in Ukraine.