Ukraine Invasion & Gas Prices: What's the Outlook for U.S. Consumers?

Gas prices are up -- and the pain may not be over yet.

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Key points

• Gas prices have soared over the past week.
• Prices could continue to rise, though they may not peak for another couple of months.

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At a time when just about every living expense under the sun is costing more money due to inflation, rising gas prices are compounding the pain. Gas prices rose this week to $4.17 a gallon on average. That's an increase of $0.50 a gallon from just a week prior. And if you think that's bad, brace yourself.

As a result of the Ukraine invasion and ban on Russian energy imports, gas prices have the potential to soar even more over the next number of weeks. That could cause a world of financial distress for the many Americans who live paycheck to paycheck without any money in savings.

How high can gas prices go?

The U.S. recently made the decision to ban Russian energy imports, including oil, in light of the Ukraine invasion. Now the good news is that Russia doesn't export a large amount of oil to the U.S. But still, the new U.S. ban, coupled with the situation overseas, is likely to send gas prices soaring.

In fact, Patrick De Haan, head of petroleum analysis at GasBuddy, says we could be headed toward $4.50 per gallon by late spring. De Haan specifically pointed to Memorial Day weekend as a target date for when gas prices might peak, but there are variables at play that could cause that to happen sooner or later.

Either way, consumers will need to prepare to stretch their budgets even further to keep up with rising gas costs. That could mean having to make some pretty serious sacrifices.

Coping with rising gas costs

When gas costs climb, cutting back on driving is perhaps the most effective solution. But it's not something that's feasible for everyone.

Some people don't live in walkable parts of the country and have to use their cars to get around. Also, a growing number of people are being called back to the office for in-person work. That may be a good thing from a pandemic-related and productivity standpoint, but from a personal finance standpoint, it's not a great thing at a time when gas prices are skyrocketing.

Now there are some steps consumers can take to cope with rising gas prices. For one thing, those working from an office can try organizing carpools, or talking to their bosses about telecommuting once or twice a week to keep their commuting expenses down. Consumers can also try planning out errands strategically to minimize trips.

Consumers may also need to get on board with the idea of cutting back on non-essential expenses to make sure they can cover the increasing cost of gas. That could mean spending less on leisure or engaging in fewer social activities that cost money. Parents may need to consider cutting back on their kids' extracurricular activities, which not only tend to cost money themselves, but often lead to extra driving.

While gas prices should creep downward eventually, Americans may be in for several weeks of pain at the pump. Those struggling with higher costs may need to get serious about making changes to their spending, especially with the potential for $4.50 gas on the horizon.