Gas prices continue to rise in Southwest, U.S. during conflict

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(The Center Square) - Gas prices continued to rise across the nation as the U.S.-Israel conflict with Iran went on past its second week. 

Since the conflict started on Feb. 28, the average cost for a gallon of gas has increased by nearly 75 cents. With no sense of relief in sight, experts weighed in on the long-term consumer impact in the Southwest.

“We are still reacting, and that's the unfortunate aspect,” GasBuddy Petroleum expert Matt McClain told The Center Square about oil price instability.

As gas prices rise across the U.S., California drivers are paying more than $5.50 a gallon.

“It’s probably going to go up another 10 to 15 cents this week,” McClain said about California.

As of Monday, the average gallon of regular gas in the U.S. had risen to $3.72, up 74 cents from $2.98 immediately before the conflict started and up 24 cents over the previous week, AAA reported.

People in the Southwest were among the most impacted by rising gas prices in the U.S. In California, drivers were paying $5.53 on average for a gallon Monday, up from $5.20 last week.

In Nevada, average prices were up to $4.59 from $4.21 over the last week. In Arizona, there was a 47-cent increase from last week’s $3.86 to $4.33.

Colorado saw price shock as the gallon grew from $3.41 to $3.82.

“The best-case scenario is that the conflict ends in the near term with all the mining and other types of damage,” said Wayne Winegarden, economist and senior business fellow at the Pasadena-based Pacific Research Institute.

The Iranian government has set mine bombs along the Strait of Hormuz, a strategic and narrow trade route that sees some 20% of global petroleum pass its waterways.

“Unfortunately, at this point it feels like a good bit of higher prices will persist beyond the conflict just because of the damage that the conflict created,” Winegarden told The Center Square. He referenced gas prices, as well as many other consumer goods, such as fertilizer, and by extension, food.

“Food is going to be at a higher cost because fertilizer is, which means yields aren’t going to be as plentiful,” he added.

While the national average gas price was still far from the all-time $5.02 high in the summer of 2022, the U.S. Department of Energy said last week that it would release 172 million barrels of oil from its strategic petroleum reserve.

“The release won't necessarily bring prices down again,” said McClain. “It's actually to help fill the shortage in areas of the world who normally heavily rely on Middle Eastern oil. Twenty million barrels a day are not getting out of the Strait of Hormuz, and that 20 million barrels is being used by somebody.” 

The U.S. strategic oil reserve release was the second largest in the country’s history. It brought the country’s oil reserve stockpile to its lowest point since 1980. It came as countries around the world released oil reserves totaling around 400 million, according to McClain.

Amid gas price insecurity, some drivers may look to electric cars to avoid similar price shocks that are out of their control. Winegarden was skeptical about any immediate migration to electric cars by American drivers during the conflict with Iran.

“Perhaps longer term once things settle down, more people may turn to their next car as an EV – that this is the final straw,” said Winegarden.