With inflation in the United States up significantly and a potential war between Russia and Ukraine, fear is bubbling up that energy prices may increase further after a steady march upward over the past year.
"It can't be good for prices," R Street Institute resident senior fellow for energy Philip Rossetti told FOX Business of a potential war in Ukraine. "We don't know how bad it would be for prices. But it can't be good for prices."
Gasoline prices are up 39% since this time last year according to AAA, and natural gas prices increased nearly 60% between the beginning and end of 2021, according to the Energy Information Administration.
Meanwhile, a lack of energy independence for Europe is giving Russia significant leverage as it takes increasingly belligerent actions threatening invasion of Ukraine, Rossetti says.
"These are state-owned enterprises in Russia that generally produce these resources," Rossetti said of Russian energy companies. "These companies are intrinsically tied to Russia's political interests. So I don't see a way that you can essentially separate out the oil and gas concerns from the politics that are happening right now and Europe's dependence on Russian energy."
He added: "So there's not an easy way for Europe to just transition away from its reliance on Russian energy resources. And I think this plays a big part in why Russia is able to make these moves and know… that blunts the options that are available in terms of sanctions."
The key factor on what will happen to energy prices will be any sanctions those countries put on Russia, and potential Russian response, Rossetti says. . For example, if Europe attempts to buy energy from outside of Russia – from the United States, for example – that could put a squeeze on supply and potentially increase prices.
Republicans, meanwhile, say President Biden and Democrats are a significant part of the reason energy prices are as high as they are now – and that Biden's policies played into Putin's hands.
"This is a culmination of the United States kind of de-arming when it comes to energy diplomacy. If -- think about it, less than a year ago, under the previous administration, we were not only energy independent, but poised to become the -- to have the ability to make the EU energy independent," Sen. Bill Cassidy told "Fox News Sunday."
"In less than a year we've lost that ability. And so now Russia has the leverage over the EU in terms of energy supply in order to kind of blackmail them into turning a blind eye," Cassidy added. "You could argue they're trying not to, but Germany's response has been quite muted to this apparently pending invasion. I would say that this is a culmination of a failed energy geopolitical policy."
Rossetti emphasized that oil and gas production in the U.S. is still very high, even despite some of Biden's energy moves early in his presidency. But he said there is room for the U.S. to counter Russia's energy diplomacy.
"The United States is a major oil and gas producer, as is Russia. So Russia is going to be using its energy resources to leverage geopolitical concessions," Rossetti said. "We have to understand that we have an ability to mitigate those with policies that understand our role in global energy security issues."
The White House, meanwhile, is emphasizing its "Build Back Better" bill – which is dead in Congress – as a way to lower energy prices. Last week, President Biden also hosted CEOs of electric utilities at the White House do discuss energy prices.
"The President and these executives… are discussing… how investments to reduce greenhouse gas emissions and expand tax credits for clean energy and research — for research and development are necessary, overdue, and critical for increasing the resiliency of our electrical grid and essential to helping the pocketbooks of Americans around the country," White House Press Secretary Jen Psaki said of the meeting.
The Biden administration is also using the Nord Stream 2 gas pipeline, which would connect Russia to Germany, as leverage in the Ukraine situation. Democrats and the White House blocked a Republican-backed bill to sanction the pipeline in Congress, saying it is important to preserve as a bargaining chip. If Russia invades Ukraine, Biden says, the pipeline will never go into operation.