Gas Prices Just One Impact of Russia’s Ukraine Invasion

In the 30 years since the fall of the USSR, there has never been a more serious international crisis than Russia’s invasion of Ukraine on Feb. 24, 2022. 

This unwarranted act of war against a sovereign nation has created a humanitarian crisis and moved the world closer to nuclear war than at any time since the Cuban Missile Crisis of 1962. 

A week into March, crude oil prices hit a 13-year high of more than $130 per barrel, and the national average price for a gallon of regular gasoline exceeded $4. Some stations were selling gas at more than $6 per gallon.

After two years of pandemic-caused demand destruction, it remains to be seen how long before these astronomical fuel prices result in a sharp downward demand for gasoline, or hit consumers’ pockets enough to cause another recession. Skyrocketing fuel prices are already adding to the highest U.S. inflation rate in 40 years. 

Other impacts of the Russian invasion on the U.S. convenience store industry include:

• Many U.S. companies suspended operations and service in Russia. Alimentation Couche-Tard/Circle K joined with other western firms like Apple, Microsoft and Nike in halting its Russian operations. Visa and Mastercard cut off their payment systems in Russia, although NACS Chairman Jared Scheeler pointed out that “while admirable, it only accounts for foreign transactions. If they really wanted to make an impact, they’d have completely shut them down.”
   
• Russian brands and products, like Russian vodka and Lukoil gas stations, are being boycotted. In New Jersey, the Newark City Council suspended the licenses of local Lukoil gas stations and convenience stores, even though most U.S. Lukoil stations are owned by individual American franchisees. Reminds me of the unfortunate backlash against BP stations after the Deepwater Horizon oil spill in 2010.
   
• The food sector also will be heavily affected. Russia and Ukraine are major food producers for Europe and some Third World nations, and the potential shortages are sure to impact the U.S.

It almost feels ridiculous to be worrying about high gas prices, inflation and recession when one wrong move by our elected leaders could spark World War III. Which reminds me of a quote attributed to Albert Einstein: “I know not what weapons World War III will be fought, but World War IV will be fought with sticks and stones.”