Middle East tensions could boost gas prices

Crude oil prices have been rising in recent weeks as tensions over Syria have risen. So far, gasoline prices at the pump are little changed. 'So far' is the operative phrase.

By Charley Blaine May 7, 2013 9:37AM
Oil derricks © Comstock/CorbisWithout a lot of fanfare, oil prices have been rising: 11% or so since mid-April for light sweet crude (-CL) in New York and nearly 8% for Brent crude, the North Sea oil that has a huge influence on what you and I pay at the gas pump.

The cause is what's going on in Syria. A long-running and increasingly brutal civil war is threatening to suck in everyone: Iran, Turkey, the United States Russia.

Israel's air attack on Syrian military targets near Damascus prompted the Syrian government on Monday to declare that the strike "opened the door to all possibilities."

Oil prices moved higher in response. Light sweet crude rose 55 cents to $96.16 a barrel in New York. Brent moved up $1.05 to $105.24. 

The effect on U.S. gas prices has been muted -- so far. AAA's Daily Fuel Gauge Report put the national average price of gasoline at $3.521 a gallon on Monday, up slightly from Sunday but down slightly from Friday.

The more important trend is that a steady decline in retail gasoline prices since a peak of $3.786 on Feb. 27 stopped on April 28 and April 29 at $3.50 a gallon. The decline set in during February after evidence mounted that global demand for oil and gasoline might fall back as economies in Europe slumped and China's economic growth slowed.

What happens next will be a function of news flow. If the Syrian situation deteriorates, fears will rise that crude oil supplies from the Persian Gulf could be disrupted. The pressure point is the Strait of Hormuz, which oil tankers must pass through to get to markets elsewhere.

About a quarter of the world's oil comes from the states that ring the gulf. Supply disruptions, as most people know, would boost prices and hurt many economies.

The worries about the Middle East affected not just oil prices. Energy was the second-stronger sector of the stock market on Monday. The Select Energy SPDR (XLE) exchange-traded fund was up 54 cents to $80.01 on Monday and is up 2.2% this month. Pioneer Natural Resources (PXD) gained $3.90 to $133.54. Marathon Petroleum (MPC) added $2.24 to $80.34.

It's likely that Friday's jobs report, which was a better than expected, also provided a boost to energy stocks.

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May 7, 2013 11:33AM
A camel farts in the desert, and we all end up paying 50 cents more per gallon. We need legislation to get the speculators out of the market.
May 7, 2013 10:10AM
we've been trained to think $4 gas is normal.  so not i see gas at $3.70 and think it's cheap.  gas will rise again.  it always does
May 7, 2013 10:33AM

That's the big problem, Steve. People or the driving public "has accepted" the $4 dollar level for gas.

More accepted on the West or East Coast then in the Midwest..

Worst yet, if we cut back on driving doesn't seem to matter?

It appears to me that people are doing less "carpooling."

I see a skinny little woman or one person driving SUVs all the time...ALONE.

Most don't seem to be trying to conserve...They don't care anymore.


And it's killing Seniors in Northern States, because they"have" to heat during winter. Or die.

Many are using 20% of their SS just for that purpose...Driving is another issue.

May 7, 2013 12:22PM
W/S's game is to use the news to spur buying and selling. And what really sucks is that they put money in their pocket no matter whether the stock goes up or down.  If you were to ask the federal and state politicians they would agree that thy want higher gas prices. The reason is because that is more tax dollars that they receive and then spend. It's coming to the memorial day weekend and you know that prices will go up for the so called start of the vacation season. It happens every year and will continue until we probably all die. Whether they use Syria or one of the other Arab countries as an excuse they will come up with some "stupid reason" to raise the prices. I liked the one comment that even when a camel farts it hits the news and subsequently raises oil prices. Seems like we still aren't trying hard enough to find energy alternatives. I guess the oil companies are taking all the excess dollars and buying the technology to keep it off the market and protecting their profits!!!!!
May 7, 2013 11:45AM
cheapest gas in Chicago @ $4.25- this is INSANE, i spend $300+ a month just for gas 90% work commute.
May 7, 2013 10:49AM

It's "very obvious" that with Oil companies and their Retail operations making record profits, that they are no longer making just " a few pennies profit" on a gallon...

I wanna slug some of the azzholes when they tell me that..

Plus they have a grocery business and deli business within the fueling Stations..Big profits margins !!


Many people are using credit, debit or gas cards for purchase; So they don't even feel the pain or really realize the cost until the bill comes due...

Another ploy by the retailer, using gas cards for a "nickel discount" on purchase; When the average consumer doesn't or can't take advanyage when paying the bills later, because they don't pay it off quick enough, like most Seniors do.....money,money,money.

May 7, 2013 10:57AM

Taxes on fuels particularily gas are another "sore spot" with me, it's one of the "hidden taxes" that few seem to grasp....States and the Feds raise them using different excuses, and people sometimes are not hardly aware of how much it's costing them...

It's one of the ploys that Republicans slyly use, but then spout "no new taxes", I call bullshidt.

I've seen it done for decades...

The same has happened in the "sin tax arena" with cigarettes,tobacco, booze and beer...

All under handed, and then tout "no new taxes"..


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