Invasion of Ukraine will likely send gas prices over $4/gallon in Wisconsin, UW professor says

MADISON, Wis. — The conflict in Ukraine is already having an impact on Americans’ personal finances, and one professor from the University of Wisconsin-Madison said things will likely get worse in the short term.

In an interview Thursday, Wisconsin School of Business Professor Moses Altsech said he believes gas prices will hit $4 per gallon in Wisconsin in the wake of Russia’s invasion of its eastern European neighbor.

Altsech stopped short of offering a prediction of just how high prices could climb but stressed the U.S. has survived previous spikes in fuel prices and come out better in the long term.

“Quite frankly, the more severe the U.S. response to Russia is and the world’s response to Russia is in terms of sanctions, the more severe the consequences to us are going to be too,” he said. “Sometimes, quite frankly, $4 a gallon at the pump is for me is the price you pay to (stand) up to thugs who want to conquer the world.”

The U.S. has a number of options to help minimize how high gas prices rise, including utilizing strategic reserves and ramping up domestic oil production.

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Rising oil prices have a ripple effect that goes beyond the gas pump, he said; oil is used to manufacture plastics, for example, so other household products could also see price increases.

“At a time when we’re trying to contain inflation and inflation is running high and the Federal Reserve was getting ready to fight that with interest rate increases, now inflation is going to be fed by this crisis artificially and we’re going to see some increased prices at the supermarket – there’s going to be increases in the price of wheat, there’s going to be increases in certain… prices,” he said. “I don’t think they’re going to be exorbitant increases; I think they’re going to be within the realm of something we can certainly handle as an economy.”

The United States has imposed sanctions on Russia in the wake of the invasion. Asked whether Russia could do the same in retaliation, Altsech said any sanctions Russian President Vladimir Putin or other allies could impose would have very little impact unless they were imposed by China.

That scenario, he said, is unlikely, adding China may help Russia evade U.S. and European sanctions but likely wouldn’t risk getting into a fight with some of its major trading partners.

As for how long financial impacts could last, Altsech said he believes any interruption would be temporary. The same, he said, holds true for the stock market.

“(The disruption) may last for a couple months, but if things kind of stay the course, things will slowly normalize 1and eventually start to improve regardless of what happens in terms of the outcome of the war,” he said. “There’s going to be a short period of disruption to be sure, and if things escalate further, there is potential for even further disruption.”

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