We’re entering a third month of conflict between the U.S. and Iran, and national average gas prices Saturday were at nearly $4.45 per gallon, according to AAA data. Could prices soon exceed the highest recorded average price (just over $5)?
By this Thursday, gas prices in the U.S. had hit their highest level in four years, the George Washington University said. In some parts of the country, average prices are already higher than $5 per gallon. Drivers in Alaska, Nevada, Oregon and Washington are all paying more, and in California, prices are higher than $6.
A KCBS Radio reporter even saw prices for more than $7 a gallon in San Francisco. Doug Johnson, an external communications lead for AAA, joined the station this week to discuss the situation, which is due in part to fighting in the Middle East and a block of the Strait of Hormuz, a key trade route for much of the world’s oil. Prior to the U.S. attacking Iran, average national gas prices were lower than $4 per gallon.
Reuters reported Saturday that President Donald Trump has so far rejected a proposal from Iran that would open shipping in the Strait of Hormuz and end the U.S. blockade of Iran, leaving talks of Iran’s nuclear program for later, citing an Iranian official. Trump said he wasn’t satisfied with the proposal “without spelling out in detail which elements he opposes,” Reuters said.
However, that’s not the only thing shaking up the oil market, Johnson said. There’s also the United Arab Emirates’ announcement that it is pulling out of the Organization of the Petroleum Exporting Countries (OPEC) after decades. OPEC is a major power when it comes to determining oil prices and Trump “echoing prior U.S. presidents – has long criticized the group’s work to boost oil prices,” per the Council on Foreign Relations.
“It’s just when the oil markets are unstable, you really need those markets to be stable for some of those prices to come back down and you hear things like the United Arab Emirates is going to leave OPEC and that there’s a rift there with Saudi Arabia,” Johnson told KCBS Radio. “You know, that’s United Arab Emirates is the, depending on the month, the second to third largest exporter of oil, Saudi Arabia is number one. It just shows how unstable the oil markets are right now and that’s having a ripple effect.”
As for why California sees higher prices than the rest of the country, Johnson said its due to stricter regulations as well as additives and in some cases, taxes. For those who think electric vehicles might be a way out of transportation issues, a new study from AAA indicates that they also come with challenges, such as decreased energy efficiency in high temperatures.
With the summer road trip season coming up, Johnson also warned motorists that the annual return of summer blend gas for the warmer weather means that gas prices are expected to get higher after Memorial Day.
“We won’t see much relief until probably around Nov. 1,” he said. ‘That’s when the winter blend comes back into effect, and that is, of course, much cheaper than the summer blend.”
