By Jamie Martin
Researchers at Kansas State University say gasoline prices could rise soon as global oil markets respond to growing tensions in the Middle East.
Gregg Ibendahl, an associate professor of agricultural economics at Kansas State University, studies how fuel prices change over time and how those changes affect agriculture and transportation. His analysis of two decades of oil and gasoline price data provides insight into how quickly fuel prices can react to global events.
Recent military strikes and ongoing conflict in Iran have already pushed oil markets higher. Crude oil futures increased by about 8% , moving from around $67 per barrel to nearly $72 per barrel.
According to the research conducted at Kansas State University, gasoline prices typically rise about 2.4 cents per gallon for every $1 increase in crude oil prices in the short term. Before the recent market changes, the national average price for regular gasoline in the United States was approximately $2.98 per gallon.
Based on the latest oil price increase, gasoline prices could reach $3.10 to $3.16 per gallon within about a month, Ibendahl explained.
The Kansas State economist also noted that gasoline prices often follow oil price movements quickly, sometimes within the following week. However, the effects may continue for several weeks when uncertainty in oil-producing regions remains high.
A key factor that could influence future prices is the Strait of Hormuz, a narrow waterway through which about 20% of the world’s traded oil supply passes. If shipping through this route is disrupted, global oil supply could tighten significantly.
Under severe supply disruptions, oil prices could climb above $100 per barrel, potentially pushing gasoline prices toward $4 per gallon or more.
"Longer term, the price increase could be 4.2 cents per gallon for every dollar per barrel," said Ibendahl. "While conflict may be occurring in the Persian Gulf, the resulting impact on gas prices will be felt at stations nationwide before the end of the month."
Experts at Kansas State University say that although the conflict is occurring overseas, the resulting fuel price increases could soon affect drivers, businesses, and farmers throughout the United States.
Photo Credit: gettyimages-bunyarit
Categories: National