When Les Perry, General Manager of Riverside Refreshments of Augusta, takes a look at his gas prices from January 2022 compared to January 2021, he sees a staggering figure – a 65 percent increase.
With more than 100 trucks on the road daily, the vending supply and beverage distributor is concerned about how much gas prices have increased and how much higher they may go as a result of the conflict in Ukraine.
“There’s no question it’s affecting us,” Perry said. “All of our suppliers are facing the exact same situation.”
With word of Russia’s attack on Ukraine, the price of a barrel of crude oil rose to more than $100 per barrel last Thursday for the first time since 2014. That dropped back to $92 per barrel on Friday after sanctions against Russia didn’t include oil production. In comparison, on Jan. 19, 2021, oil was priced at $52.50.
Russia is a major world oil producer, second only to the United States. The United States imports nearly 600,000 barrels of oil daily from Russia, about 7 percent of our daily consumption. A barrel is a unit equivalent to 42 gallons, which when refined yields about 19 gallons of gasoline.
The nearly doubling of oil prices has resulted in significant increases at the pump. On Friday, after fighting started in Ukraine, many local stations were priced at around $3.69 per gallon, more than a dollar increase from a year ago.
“The cost of fuel, like all costs, have gone up exorbitantly over recent months,” said Rick Busby, owner of Busby’s HVAC services, who has a fleet of 49 vehicles.
Perry said that 2021 was already an expensive year, showing a 39 percent increase over 2020. In the end, that’s going to mean higher prices for consumers.
“It ends up dribbling down to the consumer, passed on in a variety of ways,” he said. “Costs of all goods have gone up 10-15 percent. Whether it’s a soft drink, a candy bar or a bag of potato chips, everything they touch has gone up.”
Busby added, “These increases are out of our control. In any business, you have to make adjustments and accommodate accordingly.”
Even though there was a temporary decrease back below $100 per barrel, experts are predicting future increases of $5-10 a barrel, with former President Trump opining that it could jump as high as $200 per barrel. The wild cards are whether Russia’s oil production is sanctioned and whether the United States opens some of its reserves. The United States could also reopen the Keystone pipeline and resume some shutdown drilling operations, two options President Biden has seemed unwilling to do.
That leaves local companies, especially those with large fleets of vehicles, facing the question of how to cover those costs, a question not easy to answer.
“I wish I had a good answer to that,” Perry said. “We’ll just hope things get better down the road.”