LUZERNE CO. (WOLF) — Concerns over the growing conflict involving Iran are now hitting drivers here at home. Gas prices are climbing as oil markets react to instability overseas, and analysts warn we could see even steeper increases in the coming days.
According to AAA, the average price for a gallon of gas in Pennsylvania jumped from $3.12 Monday to $3.20 Tuesday. A year ago, drivers were paying slightly more at $3.30.
Nationally, the average now sits at $3.10, up from $2.99 just a day earlier.
Industry experts say the spike is tied to growing instability around the Strait of Hormuz, a critical shipping route responsible for moving a significant portion of the world’s oil supply.
GasBuddy’s Head of Petroleum Analysis, Patrick De Haan, says threats from Iran targeting vessels in that region have shaken global markets.
“One thing they have done, which is why markets are responding, is they’ve made threats that they would attack vessels that are transiting the Strait of Hormuz. Indirectly, and in a de facto way, Iran has essentially undermined the stability of the Strait of Hormuz. Nobody wants to risk several hundred million dollars of oil cargo and $100 million crude carrier by traveling through,” said De Haan.
De Haan says hundreds of ships have reportedly dropped anchor in the Persian Gulf, waiting to see what happens next. Oil prices have jumped more than 10 dollars per barrel in recent days, and that’s pushing fuel costs higher.
“My calculation is the national average, which has already gone up about 15 cents in the last couple of days, may go up another 15 to 30 cents over the next week or two,” said De Haan.
Still, De Haan says while Iran has threatened to close the Strait of Hormuz, he believes they likely lack the assets to do so directly and hopes volatility could settle within a week or two if tensions don’t escalate further.
And while some drivers are feeling the pinch, others say the increase hasn’t been too dramatic, at least not yet.
“They’re moderate compared to other states. I drive for a living, I’m in Jersey, in Maryland, so for PA it’s actually pretty moderate. It did go up 10 cents a gallon, I noticed. As far as if it goes up, it goes up. If it goes down, I’m indifferent. It’s an ebb and flow,” said Ron Pellegrini of Pittston.
De Haan says the situation is unpredictable.
“Nobody has a crystal ball, I’ve equated this to throwing a dart at a dart board that you can’t really see, because there is so much uncertainty, but Canada is going to see very real increases in gasoline and diesel prices, really similar to that of the U.S. but they’re going to be manageable,” said De Haan.