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Experts discuss how Russian invasion of Ukraine may or may not impact the U.S. economy

While oil and natural gas price increases may trickle down to consumers, other commodities, like wheat, may not be as impacted as initially thought.

DENVER — As the invasion of Ukraine continues, several local experts say the length of Russia's invasion may determine how big the impacts will be to the global economy.

"Well, Russia is one of the three top oil and natural gas producers in the world, along with the United States and Saudi Arabia. And so if there are fears or actualities of disruptions in global energy supplies, then that drives the price of oil up," said Elizabeth Van Wie Davis, a professor of international politics and policy at the Colorado School of Mines

She said the last time oil prices were this tight was the invasion of Crimea in 2014. She also explained Ukraine is particularly important to Europe for the transit of oil and natural gas. 

In a previous interview, Colorado State University economics professor Stephan Weiler said a main pipeline in Russia is one reason there's so much attention on the industry in Europe. 

"Russia is a huge supplier of gas, and with their Nord Stream pipeline, they have the ability to supply a good chunk of Western Europe with natural gas," he said. 

Credit: FILE

When it comes to Colorado, Davis said it's hard to tell what the impact will be, but energy prices could be impacted.

"So that's home heating, primarily, in Colorado, and things along those lines. It means that there'll be a greater demand for U.S. natural gas supplies and exports that we do," she said. "We can assume that it will mean higher demand for Colorado's oil, natural gas and maybe even coal."

9NEWS reached out to Xcel Energy to see if the conflict would impact prices, but we have not yet heard back.

Davis said wholesalers would also see higher prices. 

"And then they're going to have to convert those higher prices down to consumers," she said. "So what's happened so far is primarily based on fears of what could happen. And fears of the real thing. I mean, it's driving the stock market. It's driving all sorts of different commodities in addition to energy prices."

Credit: FILE

Other commodities, like wheat, have been reported to be impacted. 

"And depending upon how long the war really happens, we will see how much disruption there is of the export of the wheat," said Kishore Kulkarni, a distinguished professor of economics at MSU Denver. 

According to The Observatory of Economic Complexity, Russia and Ukraine combined make up 25.43% of the world's wheat exports, with both countries being top exporters of wheat.

However, Kulkarni believes the local impact won't be significant because of how self-sufficient the United States already is. 

"So our wheat producers will probably find different destinations to sell the wheat to. And that way, I think there will be a small increase in the world price of wheat, but not much effect on the U.S. market," Kulkarni said. 

Overall, it's still too early to understand the full impact, Kulkarni said, but he believes it may be small. 

"Any effect on them is probably an indirect effect on us. But as far as the U.S. economy is concerned, I don't see a war of any duration -- whether it lasts for one week, two weeks or two months -- is going to do a major effect on the U.S. economy," he said.

RELATED: Gov. Polis says Colorado will impose sanctions against Russia

RELATED: How is the invasion of Ukraine affecting US oil prices, markets?

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