This story was reported by Ken Schachter, Jonathan LaMantia, James T. Madore and Tory N. Parrish. It was written by Schachter.
As Russian tanks rumble into Ukraine, Long Islanders are feeling the tremors of rising oil prices and gyrating equity markets.
Gasoline prices are already up 31 cents in the past month, reaching an average of $3.73 as of Thursday afternoon, said Rober Sinclair, senior manager, public affairs, for AAA Northeast. The price of diesel fuel, meanwhile, has climbed from $3.82 to $4.24.
“Now that there’s a shooting war, the sky’s the limit,” he said. Benchmark Brent crude for a time early Thursday breached the $100-a-barrel mark.
At the Sands Shopping Center in Oceanside, teacher Lisa Derasmo of Oceanside said she is looking into a car pool to get to her job in Marine Park, Brooklyn, to control her commuting costs.
“It’s just going to get worse,” said Derasmo, 50. “You’re talking about $100 a barrel for oil. That’s crazy.”
The national average price of gas was poised to reach $4 a gallon before Russia invaded Ukraine, said Denton Cinquegrana, chief oil analyst at Oil Price Information Service based in Rockville, Maryland.
“I think this just kind of gives me more confidence in that prediction, probably in the second quarter,” he said.
Some of that will be due to uncertainty over the course of the conflict, he said.
“Markets do not like uncertainty,” he said.
Russia produces about 10 million barrels of oil a day, accounting for roughly 10% of global supply.
In addition to direct costs to motorists, Sinclair said that consumer goods will reflect higher diesel prices paid by truckers who deliver the products.
Joe DeVita of Babylon said rising fuel prices also could hurt his business, Empire Point Boating Center in Island Park.
“The price of gas is going to go up, so people aren’t going to boat,” said DeVita, 59.
Gas stations aren’t actually going to be the biggest beneficiaries of gas price hikes locally, said Emre Ocak, who owns four gas stations on Long Island and a fuel distribution company, Kardesh Petroleum, in Bellmore.
Fuel suppliers and wholesalers will reap the biggest benefits because they can raise their prices steeply and quickly, regardless of what they are actually paying for gas, he said.
“As a wholesaler, I like it, too … I can sell gas to make more profit … retail-wise, I am getting hurt,” he said.
David Frisch, founder and chief executive of Frisch Financial Group Inc., a Melville investment management and financial planning firm, said that some clients were panic-stricken at news of the invasion and falling stock market prices.
One client called Thursday morning and demanded that Frisch sell his entire portfolio until he was reminded that he could be selling at the bottom.
After recording sharp losses early in Thursday’s session, major averages charged back to close in positive territory. The Dow Jones Industrial Average rebounded from an 859-point loss Thursday morning to close up 92 points, or 0.28%. At the close, the S&P 500 and Nasdaq Composite were up 1.5% and 3.3%.
“The market may certainly fall further,” Frisch said, “but at some point, there’s a high probability that the market will be OK.”
Frisch cited a research note from Los Angeles-based B. Riley Financial Inc. that lists a dozen “geopolitical shocks” dating from Pearl Harbor in 1941 and including the Cuban missile crisis of 1962, the Soviet invasion of Afghanistan in 1979 and the two wars with Iraq in 1991 and 2003. In only three instances — the latest being the 9/11 attacks in 2001 — did the S&P 500 index languish lower 12 months later.
While some investors looked to the exits, others went bargain-hunting Thursday, Frisch said.
“I don’t know if this is the bottom, but the prices we paid this morning were less than we would have paid a few months ago,” he said.
In Huntington village, Long Islanders spoke of unpredictable consequences ahead.
Retiree Helga Kramer said she is worried Russian President Vladimir Putin won’t be satisfied with gobbling up Ukraine and will attack a NATO member country, provoking a military response by the United States, she said.
“Who knows what this is going to lead to…I feel anxiety” said Kramer, who grew up in Switzerland and Germany. One of her fears is inflation driving up the cost of gas and groceries — “With prices going up, I will have to cut down on some of my donations,” she said.
David Burgess, 43, of Huntington, said, “Inflation is already stifling and we’re still dealing with the pandemic….[The Russian attack on Ukraine] couldn’t come at a worse time.”
