Heavy smoke rises over the Moscow Oil plant in the southwest suburb of the Russian capital 21 August. No casualties were reported but the fire creates a dangerous situation on this plant and living houses. (Photo by ALEXANDER NEMENOV / AFP) (Photo by ALEXANDER NEMENOV/AFP via Getty Images)
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The summer of 2025 was the summer of lower gas prices. You may remember the headlines on Memorial Day weekend, as well as the July 4th holiday that marked the lowest gas prices since 2021. According to the American Automobile Association, gas prices were down .30 a gallon from 2024. After several years of higher pump prices, people were finally getting some relief, and the promise of fall and winter coming soon, and the lower prices that come with it every year gave people something to look forward to in a time of rising food and energy costs. Just last week, there was a buzz about September 15th, the last day the Environmental Protection Agency requires summer blend gasoline in pumps in all states except California, as the cheaper winter blend was coming soon, and gas prices were expected to fall with it.
In addition to all of that, OPEC had just announced another full year of oil production increases of 137,000 barrels per day each month. All signs were pointing towards lower oil and gas prices for Americans this fall and winter. Ukraine’s new strategy for Russia may put a damper on all of that. Since August, Ukraine has sharply increased strikes on Russian oil infrastructure, which includes refineries, pipelines, and export terminals. There is widespread reporting that the Russian pipeline company Transneft is restricting oil production from producers; according to Transneft, this is false. The United States Energy Information Administration is reporting that Russian crude oil and condensate exports are down by 500,000 barrels per day from 2024. This has caused oil prices to rise by 5% since last week.
Ukraine’s new strategy seems to be working; Russia’s revenue from oil and gas exports was down by nearly a billion dollars in August compared to July. Those reduced exports can also lead to higher oil and gas prices here at home, and as of today, the national average cost for a gallon of gas is $3.18, according to AAA, exactly where it was one year ago. Just weeks ago, gas was 10% cheaper than last year; that was erased. The EIA is still predicting gas prices will fall this winter, but there is no doubt that Ukraine’s strategy in Russia is going to play a significant role in how that shakes out. It is safe to say that with this strategy, they will continue doing this and are likely to escalate it even further.
The strikes not only hurt Russia’s oil revenue-dependent economy, but they also slow down its ability to get precious fuel to the front lines. In addition, there are reports of gas shortages around the country. Ukrainian intelligence officials are stating that they will continue hitting all major critical infrastructure tied to oil and fuel supply as part of degrading Russia’s logistical and economic base. The extent to which Ukraine is successful in these attacks will continue to have a direct impact on gas prices here at home.
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