Pronounced unrest in the Middle East could be one of multiple factors that might combine for a sharp climb in prices at the pump this summer, one travel official says.
Over the last 30 days, both crude oil and refined gas prices have leaped or fallen depending on news of conflicts in Israel, Iran, and Palestine. Gas futures hit a 10-month high of $2.33 per gallon as Israel and the U.S. carried out airstrikes on Iran, though futures slipped back to $2.15 per gallon as a tenuous ceasefire was reached.
“We’re always worried when there are missiles flying in the Middle East and what it could do to energy,” Don Redman of AAA said. “We saw the market react very strongly.”
Tensions remain high even after the ceasefire commitment was reinforced earlier this week, but the good news for those concerned about their wallet is that while pump prices have risen by 1.04% over the last month, the average is still 17.65% lower than one year ago, according to the Energy Information Administration.
Many economists are concerned that international sanctions and war will dramatically slow oil exports from Iran, which holds the world’s third-largest proven oil reserves, meaning lower supply could stress the prices.
While Iran is not a major oil supplier in the west, it is one of the primary oil partners for powers like China. Redman said China will likely have to reenter the market elsewhere, raising demand and further exacerbating a rise in crude oil rates.
But the AAA spokesman noted that potential price pressure doesn’t end in the Middle East, such as the Trump administration continuing to unravel Biden-era oil policies. But perhaps the most significant, and most uncontrollable, would begin in the Atlantic Ocean.
“I don’t really have to remind Mississippians that we are now in hurricane season,” Redman said. “Once we get into late July, things start heating up in the Gulf for us. So you have a potential perfect storm for prices to get very high this summer unfortunately.”
Many of the largest service station companies purchase gas based on futures pricing, meaning prices at your local pump might not be affected for up to two months.
The highest average gas price in the U.S. came in June of 2008 when a gallon of regular fuel reached $5.30 per gallon, while the most recent historic surge came in June of 2022 when prices reached $5.02 per gallon.
On June 12, 2022, Mississippi saw a record-high average price of $4.52 per gallon.
