SAN DIEGO — As the fighting intensifies across Ukraine, the impact of Russia’s invasion is already being felt here at home. So how will the economic fallout from the war in Ukraine affect us here in San Diego?
The price of crude oil topped $100 per barrel Thursday for the first time since 2014 amid Russia’s invasion of Ukraine.
“Oil affects the economy,” said Dr. Alan Gin, professor of economics at the University of San Diego. “It affects people in terms of their daily life. People have to fill up to commute here in southern California and San Diego, and so they see that impact. Gas prices could rise even as much as a dollar a gallon, and they’re already pretty high here.”
A wave of international sanctions against Russia’s economy could disrupt worldwide oil supplies.
“People are worried that it’s going to have an impact in the global oil markets, and that translates into higher prices as far as gas is concerned,” said Dr. Gin.
Russia is the 2nd largest natural gas producer in the world and one of the largest oil-exporting nations. In fact, Russia is the third largest supplier of oil to the United States behind Canada and Mexico.
“We import almost 600,000 barrels a day from Russia and so if you cut that off, the U.S. is going to have to go and find other sources,” said Dr. Gin. “And if we go on the global oil market to do that, that’s going to drive up oil prices worldwide and that will affect us here in the U.S.”
According to AAA, the national average for the price of gasoline is at $3.54/gallon with California well above that at $4.77/gallon. Any disruptions coming from Russia and Ukraine will likely cause prices to go even higher.
The price of food could also be impacted. Ukraine is the 4th largest exporter of barley in the world, and 70% of the world’s barley supply is used for animal feed.
“Barley is used in two main areas. One is for feed crops and the other is for brewing purposes, so you could see the price of both meat and beer increase in the near future as a result of any disruptions of barley from the Ukraine,” said Dr. Gin.
Ukraine is also the 4th largest exporter of corn and the 8th largest exporter of wheat, and so we could see grain prices could rise too.
“Unfortunately, the cost of living is going to rise,” said Dr. Gin. “Prices are going to rise for gasoline, for food, and maybe for some other products as well for some supply chain disruptions, but unfortunately, it’s just going to be more expensive for people to buy products here in San Diego.”
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