National gas prices in the United States have risen drastically since the United States and Israel launched initial strikes against Iran on Saturday morning, according to petroleum and energy analysts, as economic uncertainty due to the conflict abroad becomes more formidable.
Monday represented the fourth-highest single day national gas price increase since 2005, according to Patrick De Haan, head of petroleum analysis at GasBuddy, with the 12 cent jump trailing an 18.1 cent increase on Aug. 31, 2005; a 15.8 cent increase on March 4, 2022; and a 14.4 cent increase on Sept. 1, 2005. Two of the previous highs occurred either during the Iraq War, with the per-day uptick in 2022 reflecting Russia’s invasion of Ukraine.
Diesel increases have also hit top-10 record highs dating back to 2005, increasing 10.8 cents on Monday. Four of the top 10 per-day increases occurred in March 2022, within 2-3 weeks of Russia invading Ukraine as part of a war that just passed the four-year mark.
Matt McClain, petroleum analyst at GasBuddy, told Military.com that he, De Haan and others are being “very cautious” regarding predictions of the rising price of gasoline.
That being said, we are definitely going to be moving in an upward trajectory, looking at possibly about 20-55 cents per gallon between now and, let's say, a week or two from now, provided any de-escalation. - Matt McClain to Military.com
“If we have a de-escalation, then that forecast will be off a touch, obviously. But if we remain where we are in a conflict, then it's probably looking along those particular lines," he added.
Many Scenarios At Play
To the average American who fills up his or tank, this means they are essentially at the behest of the conflict itself and all the associated repercussions affiliated with trade, imports and exports, and the unknown.
As McClain pointed out, missiles may get lobbed and perhaps just one misses the mark, causing neighboring countries to deploy countermeasures for protection during a period of geopolitical volatility.
“There's just so many scenarios that make it really difficult to try to say, OK, gas prices are going to do this or they're going to do that in the long term,” he said.
Instead, that lends itself towards what he described as a post-analysis in which predictions are made in advance and developments are compared directly to those predictions for the best accuracy available at that period in time.
That, of course, is difficult in a fluid situation like this with many moving parts. As President Donald Trump said, he can see the attacks continuing for 4-6 weeks but, again, that could change on a dime with all the factors at play with the backdrop of a destabilized Middle East.
“So, a couple of scenarios, and it's just a scenario: What happens if missiles do some extensive damage to some of the neighboring countries like Saudi Arabia and create a long-term repair issue on their ability to produce oil?” McClain said. “Well, that presents a whole different scenario on how the price point looks than if nothing happens other than the conflict comes to an end and everybody else around Iran is still producing the same amount of oil as they were prior to the conflict beginning."
The conflicts back and forth and the different scenarios that could really kind of role play through over the next six weeks, it makes it super difficult to try to figure this one out.
States Will See Varied Price Points
National and per-state gas price averages are prone to show wide-ranging data due to multiple factors, including the effects of gas taxes.
Some states have a much higher gas tax than other states, McClain explained, predominantly leading to a large difference when granular data is evaluated.
De Haan, for example, posted a chart on X on Tuesday showing at least 50 cent per-gallon increases in Council Bluffs, Iowa (60 cents), East St. Louis, Ill. (54 cents), and Moorehead, Mont. (50).
“That being said, a little bit of a caveat: When you have a summer blend, a reformulated blend of gasoline, that can also have a slight impact depending upon what part of the country you're in versus another,” McClain added. “We have a really interesting map of different types of reformulated gasoline, depending upon states or even sometimes local metro areas that have their own special blend that can vary the price just a little bit during the summer months."
AAA reported on Feb. 26, a handful days prior to the current strikes, that the national average for a gallon of regular gasoline went up by more than 5 cents, to $2.98. They, too, attributed that to refineries beginning the process of producing summer-blend gasoline which contains pricier additives to help reduce evaporation during warmer months.
Other gas demand is also expected to increase next month with spring break and more planned road trips, per AAA.
I can say we are still obviously going to be seeing that increase when it comes to prices for the reformulated gasoline. We normally do see prices increase in the springtime because we're switching over from the winter blend to the summer blend.
All these predictions are on top of that initial typical annual price point, McClain added.
Then there’s the Strait of Hormuz, where approximately 20% of the world's oil supply goes through in transit back and forth on tankers on a daily basis.
“It's obviously a very big deal,” McClain said. “Domestically in America, about 10-15% of the mix is Middle Eastern oil that makes its way into our oil infrastructure.
“But other countries aren't so lucky and so you do have to obviously empathize with countries that are far more heavily reliant on Middle Eastern oil and how this could potentially impact them.”
