What impact the Israel-Hamas war might have on oil prices.

<div class="block">The ongoing Israel-Hamas war could have implications on our wallets here in the U.S., particularly on the cost of fuel. Robert Sinclair, AAA Northeast manager, joined &#39;Stretching Your Dollar&#39; to talk about the already inflated cost of fuel and how the war in the Middle East could send them even higher.</div>
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Stretching Your Dollar

Stretching Your Dollar: How the Israel-Hamas War Could Impact Oil Prices

Oil prices spiked this past week over concern that the war between Israel and Hamas could affect production throughout the Gulf region. But the impact of the ongoing conflict in the region on gas prices in the US remains uncertain. So to learn more, we have a AAA Northeast senior manager, Robert Sla Robert. Always a pleasure. Thanks for joining. Thank you very much for having me. What impact have we seen on oil prices from this war so far? Well, there was a brief uptick in oil prices. Uh They went up by about $3 a barrel over the past couple of days, but today they've gone back down. Uh We're about $83 per barrel. Um And so it looks like there's been a little or no impact. Um There's always a psychological effect when uh certain events happen. I remember years ago, uh some terrorist group had threatened to mine the strait of Hormuz and prices jumped overnight and then when nothing materialized, they went back down. Um this is a real something that has happened a terrible tragedy, but it's not having any on oil infrastructure. So certainly we're learning oil prices, right. And the future prices can be very volatile. Is there any direct impact Robert between what we see those prices versus what consumers might expect to pay at the pump? Well, throughout all this, we've seen gasoline prices continue to trend downward. Uh, back on September 27th. Uh, we're at, I'm sorry, September 17th. We're at 3 87 per gallon and today we're at 3 66. So we've seen prices go down 21 cents per gallon. Uh retail for gasoline in less than a month. Uh That is the national average. Of course, there are some states uh out west where the prices are over $4 a gallon approaching $5 a gallon. But as an average, the prices keep going down and that is the trend usually at this time of year, uh demand goes down from uh the summer driving season and the switch over to winter blends of gasoline is usually completed, uh mid-september and those winter blends are cheaper to uh refine and distribute. So we generally see a trend downward in gasoline prices at this time of year and that's whole for this year. Ok. So it sounds like you don't expect any impact as of now on prices at the pump based on what we see happening this war overseas. But Robert any more insight into how large of a role that Israel and the Gaza Strip play in global oil and gas infrastructure. Well, the region uh Israel and Gaza are pretty close to some very important oil producing nations. Uh Saudi Arabia, the Kuwait, the United Arab Emirates and uh some major waterways, the Persian Gulf and the Strait of Hormuz. But uh without any spread to those regions and affecting those countries, it doesn't look like there will be any major impact. The strait of Hormuz is very, very important, uh anywhere from 20 to 30% of the world's crude oil transits through that waterway. And it's, it's sort of a bottleneck. Um, and, uh, the countries in the area agree to, uh, keep it clear and patrol it. And, uh, so far there has been no impact on those nations or those waterways. So it, it looks like at least, uh, for the time being that the conflict will have no impact on crude oil supplies and with the gasoline prices, what would you recommend to viewers watching Robert who might be concerned might want to add a little bit of cushion in their budget just in terms of how they should be accounted for and preparing for gas prices in these next few weeks, maybe even the next few months. You know, it's really tough on consumers. We've done surveys at AAA of drivers asking them what the pain point is for the price of gasoline. And in March of 2018, when doing a much better economy, drivers said $3 a gallon. We revisited that survey last year and 60% of drivers said that uh $4 a gallon is the pain point. So 40% saying $3 a gallon, 60% saying $4 a gallon with the average at 3 66 right now, you have to expect that there are a lot of people that are suffering that they just don't have the elasticity in their budgets to afford gasoline prices that fluctuate as wildly as we have seen. Uh I would recommend that, uh, they keep their vehicles in good running condition, uh, paying particular attention to tire pressure, especially as the weather cools, uh, slow down their speeds on the roads. Um, but it's, it's very tough for a lot of drivers and, uh, just worry that it's, it's having an impact along with inflation, uh especially for food and for shelter. Um, that is having a negative effect. And also you have to look at the price of diesel, which is, uh, kept going up right now. I believe we're at 4 49. Um, and back. Uh, well, the price has been pretty consistent in the four forties or four fifties, but when you consider a truck holds 300 gallons and when they deliver their, uh, supplies and everything from clothes to cars gets delivered by diesel burning trucks, that price of diesel has to be looked at closely because that's going to have an effect along with gasoline prices on the family budget. Bottom line. Robert. My final question to you is, let's say the US tightened sanctions against Iran or this war and crisis extends beyond the Gulf region. What do consumers need to know if that happens? Well, the sanctions on Iran are already in place. And in fact, in recent months, there had been talk about easing the sanctions on Iran with perhaps a million barrels a day coming online from that nation that would have helped to ease supplies that were tightened after Opec Plus back in July cut production by 3.6 million barrels. Um, there's been speculation that Iran was somehow involved in these attacks. The nation has been suffering. I've seen reports where internally they're having a lot of problems because of the loss of the oil revenue. So I don't know what they could do to increase sanctions. Certainly Iran wouldn't, uh, wouldn't like that. I don't think because of the economy is suffering so badly there. But if that war were to continue and spread, the impact could be major right now. Things are, are pretty calm and we certainly hope that they'll remain that way and there will be no spread of the conflict. All right, Robert Sinclair breaking down what we need to know for gas prices. Robert, thank you for joining.