Gas price fears allayed in days following attack in Saudi Arabia

Although industry experts generally agree the drone attack Saturday on one of the world’s largest oil production facilities in Saudi Arabia could result in higher gas prices worldwide, local gas station operators aren’t saying how they think price at local pumps will be affected ... at least not publicly.

Meanwhile, an oil and energy analyst told the Southeast Missourian on Tuesday the attack’s overall impact on gasoline prices could be negligible as long as the Saudis are able to ramp up oil production to near pre-attack levels in the next few weeks.

“From an oil supply standpoint, this may not be as terrible an event as it was first perceived,” said Chuck Freedman, senior vice president with Commerce Trust in St. Louis. Freedman provides oil and energy analysis for his portfolio clients.

“There was speculation we could see pump prices jump anywhere from 10 to 25 cents per gallon,” Freedman said. He noted crude oil prices shot up 14% Monday and then fell 6.5% Tuesday following speculation by the Saudis production could be almost fully restored by the end of September.

“Given this recent news, I think it’s very possible we may not see any major increase in pump prices,” he said.

A check of pumps in Cape Girardeau and Jackson on Tuesday afternoon found prices ranging from a low of $2.13 for a gallon of regular unleaded fuel to a high of $2.49 — a 36-cent spread — with the majority of regular unleaded gasoline pumps set at $2.39 a gallon.

On average, the prices were a few cents higher Tuesday than they were at the same time last week.

Nationwide, AAA reported an average price Tuesday of just more than $2.52 per gallon for regular unleaded gasoline, about 25 cents lower than a year ago. In Missouri, the average price Tuesday was reported at a fraction above $2.32 a gallon.

Mississippi had the lowest average price Tuesday for a gallon of regular unleaded gas at just more than $2.21, while Hawaii was the state with the highest average price at more than $3.65 a gallon, according to AAA.

As a result of the attack, Saudi Arabia suspended production of about 5.7 million barrels of crude oil a day, or almost 6% of the 100 million barrels the world consumes each day.

Oil industry analysts and economists have said stockpiled oil reserves, including those held in the U.S., could help negate significant price increases at the pump, but if the flow of Saudi oil is restricted for more than a few weeks or months, there could be far-reaching effects. Major fuel-consumption industries — such as airlines, railroads, cruise lines and trucking — could feel a major impact if there was a significant hike in fuel prices.

In the months and years ahead, Freedman said there will continue to be concern over instability in the oil-rich Middle East, which could boost the price of a barrel of oil and, in turn, the price of a gallon of gas.

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