By Hadassa Kalatizadeh
The Russian war may hit home in New York City when residents and businesses get their soaring energy bills. Losing Russia’s supply of oil may very well lead to supply shortages, energy inflation and oil price volatility.
As reported by Crain’s NY, this volatility is likely coming our way this winter even though the United States does not really rely on oil from Russia. On Friday, the price of oil rose to $100 per barrel for a while before falling back to a little over $90. The price uncertainty is based on expectations of added sanctions onto Russia. On Thursday, Sen. Robert Menendez of New Jersey, chairman of the Senate Foreign Relations Committee, said in a statement that they were looking into sanctions for “crippling Russia’s key industries.”
Russia is currently a big oil supplier in Europe and if the US and European countries join to sanction Russian swift transactions and oil purchases, it would leave the US on the hook to fill in that supply gap for the European countries, explained Adrian Karatnycky, a senior adviser at Karv Communications who counsels the Ukrainian Federation of Employers of the Oil and Gas Industry.
That would lead to more increases in NYC energy costs and rising gas pump prices. Already in January, the overall cost of fuel and utilities in the metropolitan area rose over 18 percent compared to January 2021, as per the U.S. Bureau of Labor Statistics Consumer Price Index. Last month’s electricity was up 20 percent compared to the year earlier, and gas was up 16.7 percent.
Additionally, there may be a sanction on Lukoil– the Russian company that manages a distribution network in 11 East Coast states, including New York. There are a handful of Lukoil stations in the five boroughs where it sells furnace oil and natural gas as well as gasoline.
There is also the proportionally moderate amount of oil that the US does import annually from Russia. As per Crain’s, last year, the United States imported 209,000 barrels per day of crude oil from Russia, through November. That is up from 78,000 barrels per day in the full year of 2020. That means last year Russia was the US’ fifth-largest source, as per the U.S. Energy Information Administration. The U.S. imported even more in petroleum. Last year it imported 696,000 barrels per day through November, which is up 21 percent since 2020 when it imported 552,000 barrels. For petroleum imports, Russia is US’ third largest source.
