MANHATTAN, Kan. (KSNT) – Oil and gas prices have been steadily rising recently, but what is causing these huge increases? Is the war between Russia and Ukraine along with the sanctions placed on Russia to blame for these escalating prices?

Professor Gregory Ibendahl with Kansas State University helped explain on Wednesday during a Zoom meeting. Ibendahl specializes in farm management and agricultural finance and used his expertise to create an in-depth presentation on the current state of oil prices in the U.S. and abroad. According to his findings, the rise in gas prices may not have much to do with Russia after all.

“Gas right now, we’re at record highs,” Ibendahl said. “We’re at $4.20 a gallon which has never been in that territory at least from a nominal price. Just in this last year, in the last two-and-half months, gas has already been up 24% this year.”

He went on to say that gas has gone up by $0.50, and diesel has gone up by $0.75 in the past week. Coming from the past year’s increases where gas went up by 45% and diesel by 37%, it was reflected by an almost vertical line on a graph that Ibendahl was using in his presentation for February 2022, showing that prices are going nowhere but up with no sign of coming down.

“I don’t know where prices are gonna end up, but we’re still certainly in that area where the market is trying to figure out where things need to be so expect to see this kind of jump up and down for the next several weeks,” Ibendahl said.

The professor said that not everything can be blamed on the Ukraine-Russia conflict. Other factors, such as COVID-19, changed the oil market. According to Ibendahl, oil prices nearly doubled in 2021 alone.

“Even in the last year, prices have essentially doubled,” Ibendahl said. “We pretty much started the year of 2021 with oil prices right around $50 dollars per barrel and just yesterday, when we were looking at this, the futures price for West Texas Intermediate was almost $120 per barrel. Just a $24 dollar increase in the last week.”

Ibendahl then said the U.S. is approaching new territory as far as nominal oil prices, as oil and gas have not reached these levels since the 1970s when the members of the Organization of the Petroleum Exporting Countries (OPEC) stopped selling oil to the U.S.

However, he did point out that the U.S. is currently one of the largest producers of oil in the world at over 18 million barrels per day along with being one of the world’s leading net exporters of oil. This is due to the U.S.’s use of fracking or injecting liquid at high pressures underground to force open fissures and remove oil or gas.

“Say what you will about fracking, it has done wonderful things as far as the amount of oil we have to actually import into the U.S. which is very good as we were very dependent upon foreign oil, that percent has gone down quite a bit,” Ibendahl said.

This contradicts the notion that the U.S. is reliant on foreign oil, but the professor helped to clarify the situation. While the U.S. produces large amounts of oil thanks to fracking, the type of oil taken through these methods is “lighter and sweeter” than other sources of oil.

“Oil is not all created equal,” Ibendahl said.

Oil can be classified by how thick it is or by how much Sulphur is in it, giving it qualities of lightness and sweetness among Petroleum experts. The U.S. trades its version of oil to other parts of the world in exchange for the “heavier and thicker” oil which can be refined in domestic facilities that are better equipped for handling oil of that type. Much of the oil that the U.S. imports comes from Canada, around 64% according to Ibendahl, and is of the heavier variety.

Fracking more than doubled oil production in the U.S. in the years after 2007, giving the U.S. a sharp increase in oil production until the beginning of the COVID-19 pandemic when oil production began to slow. Importing foreign oil has dropped off significantly due to fracking compared to what it was like during the 70s and 2007 according to Ibendahl, but the U.S. is still reliant on those foreign sources.

“We get 1.5% from Russia, so even though we’re only kind of insulated directly from the effects if we do try to shut Russian oil off, it’s not a direct influence, but that’s certainly going to affect oil prices,” Ibendahl said.

Cutting off Russian oil doesn’t have much of an effect on the U.S. compared to other countries that may depend on Russian oil. Russia is the second-largest exporter of oil behind the Middle East with 10,846,00 10,496,000 being produced by both countries respectively.

Ibendahl then said that Russia has been, historically, a self-sufficient country until more recently when they discovered the benefits of world trade. The country of Russia has often been accustomed to surviving off of their own resources for long periods of time, meaning that the current sanctions might not have much of an effect on Russia.

Ibendahl then quoted a line from “The Matrix: Reloaded” that he believed more aptly described Russia’s outlook on the current situation.

“There are levels of survival we are prepared to accept,” Ibendahl said. “However, the relevant issue is whether you are ready to accept the responsibility for the death of every human being in the world.”

Ibendahl said the question should be how badly does Russia want Ukraine? What are they willing to do or accept to achieve their goals?

“What are they willing to accept for this to make this Ukraine thing happen here?” Ibendahl said. “I think people need to give that a thought as well here. Certainly, imposing sanctions has a cost to us as well. I mean, I look at Europe and their needs for natural gas, they’re gonna pay much higher prices for natural gas in order to stay warm and we’re not gonna be immune from the price increases as well here.”

Europe relies heavily on natural gas exports to stay warm during the winter and will likely suffer due to fluctuating oil markets and rising costs. Ibendahl did not paint a positive picture for oil prices in the coming days as he began to end his presentation. He said that $5.00 per gallon for gas and $5.50 for diesel should be expected if oil starts going for $150 per barrel.

“I really expect oil to kind of stay above at least $100 here going forward even if things do settle down with Ukraine,” Ibendahl said.