The News Star
Russian invasion of Ukraine affecting Louisiana economy, and not just with higher gas prices
Rising gas prices aren’t the only consequence of Russia’s invasion into Ukraine. The conflict is having other effects on the U.S. economy, according to University of Louisiana Monroe economics professor Tammy Johnston.
“There seems to be a lot of negative things happening right now, and none of it is going to be a quick fix,” Johnston said.
Gas prices are increasing because 7% of the oil in the United States is imported from Russia, Johnston said. Currently, Louisiana is experiencing some of its highest gas prices since 2014. Things could become worse if Russia cuts off its oil supply, Johnston said.- ADVERTISEMENT -https://s.yimg.com/rq/darla/4-10-1/html/r-sf-flx.html
Additionally, the stock market is becoming more volatile due to the conflict. Johnston said there has been a dip in the stock market caused by Russia’s invasion and the uncertainty that has come with it.
Johnston said this affects most people through their retirement savings, which are usually 401(k) accounts that invest in the stock market.
“Even if people aren’t actively investing, they have retirement savings,” Johnston said. “And so you’ve got the 401(k)’s, and they’re going down in value. And so it’s causing a lot of anxiety.”
Fertilizer prices are also on the rise, leaving farmers to absorb the price jump. Johnston said Russia is the second-largest producer of fertilizer in the world, so the invasion and sanctions on Russia do not help.
Since last year, fertilizer prices have risen 50%, and they continue to go up, Johnston said, with some fertilizer prices having doubled . These increases will affect food supply, she said, but farmers are going to be the most affected.
“My family back in Illinois has a farm, and whenever I was there at Christmas, that was all the talk was — the cost of fertilizer,” Johnston said. “At least for our farm, we made a point to buy the fertilizer earlier than we usually would because we were anticipating even more increases.”
Furthermore, travel restrictions enacted due to the conflict in Ukraine, along with heightened fuel prices, are causing air-fare costs to go up. This change will affect tourism, an industry Louisiana relies upon heavily. Increased prices deter more folks from travelling to tourist-heavy places like New Orleans.
Johnston said these economic woes sit on top of problems that pre-dated the invasion in Ukraine, including inflation. She said the U.S. Federal Reserve is preparing to increase interest rates in March to offset inflation. This will cause people to want to spend less, thus causing prices to go down. However, this chain of actions has the possibility of leading to a recession.
“We’ve got a lot happening all at once, and none of it’s good,” Johnston said.