Gas prices could spike again this winter, Yellen warns

The price of regular unleaded gas is advertised for just under $4 a gallon at a Woodman’s, Wednesday, July 20, 2022, in Menomonie Falls, Wis. (AP Photo/Morry Gash)

Treasury Secretary Janet Yellen on Sunday warned that gas prices may spike again this winter.

Yellen told CNN’s Dana Bash on “State of the Union” that gas prices could rise due to the European Union largely halting Russian oil purchases this winter and banning provision of services that allow Russia to ship oil by tanker.

“It is possible that that could cause a spike in oil prices,” Yellen said.

But Yellen noted a western price cap proposal was designed to balance curbing Russian oil revenues helping fund its war in Ukraine, while maintaining some access to Russian oil to “hold down global oil prices.”

“So I believe this is something that can be essential,” she said. “And it’s something that we’re trying to put in place to avoid a future spike in oil prices.”

The Group of Seven nations, which includes the U.S., Canada, France, Germany, Italy, Japan and the United Kingdom, agreed to a price cap on Russian oil earlier this month. The nations did not say exactly what the cap would be yet.

The move is designed to restrict Russian oil sales above a certain price. And if Russia moves to sell to friendlier nations, such as China or India, it will likely face higher service costs and competition from countries selling less expensive product.

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Russia, the world’s third-largest oil producer, has threatened not to sell to countries that participate in the oil cap, which could further exacerbate a rise in global oil prices.

Moscow has also effectively shut down a major gas pipeline to European nations, claiming it needs repairs, which could further shake up the world’s energy sector.

After soaring to a national average of $5 per gallon earlier this year, gas prices have fallen to an average of $3.71 in the U.S., according to transportation organization AAA.