A week after the destructive attack on Saudi Arabian refineries, gas prices seem to have leveled off in metro Atlanta at an average of 19 cents a gallon higher than they were before the drone strikes.
On Sept. 14, the day of the attack, the average price for regular unleaded gasoline in metro Atlanta was $2.49 a gallon, according to Gas Buddy. But within hours, the pump price was climbing and within 72 hours of the attack, the average Atlanta price was up to $2.63 a gallon.
It kept rising more slowly until it peaked at $2.68 a gallon, where the average stood on Friday morning.
"Immediately after (Saudi Arabia) was attacked and oil production impacted, the market reacted knowing this was a turning point," said Patrick DeHaan, head of petroleum analysis at Gas Buddy, which monitors and analyzes oil and gas markets. "But I think the worst is behind us in terms of gas price increases."
However, tension in the Persian Gulf remains high and more military action is possible, which would likely spur more price hikes.
Despite a claim of responsibility by the Houthi faction fighting the Saudis in Yemen, both Saudi Arabia and the United States have blamed Iran for the attack. The U.S., which has backed the Saudis, has hinted at retaliation, while Iran has promised "all-out war" if it is hit.
If there are more attacks or a full-scale war, the impact on oil and gasoline prices will depend on how much damage is done to oil production and for how long, DeHaan said.
While the drone attack took out about half of Saudi production, the Saudis promised a rapid return to normal output. That promise might have tempered the price spike, but it didn't stop it.
The price rose throughout the global distribution chain from the oil fields through the refineries that turn petroleum into gasoline, diesel and jet fuel. Prices also rose for gas at Atlanta pumps – even though that gasoline had been purchased long before the attack.
That’s typical, DeHaan said, because retailers are “pricing in” their uncertainty about future supplies.
Atlanta average gas price, gallon of regular
Friday: $2.68
Month ago: $2.49
Year ago: $2.77
High: $4.11 (July, 2008)
Source: Gas Buddy, AtlantaGasPrices.com, AAA Fuel Gauge
The average price through the state of Georgia is $2.59 a gallon, 8 cents below the national average, according to AAA.
"No, it doesn't seem fair to the motorist," said Montrae Waiters, a spokeswoman for AAA. "It's just really uncertain right now and that's part of what's going on with the retailers. I know sometimes it's all about convenience, but shopping around is very important."
Still, not all “pricing in” is equal.
On Friday, the highest price being charged for gas in metro Atlanta was $3.19 a gallon at a Shell in Midtown. More than a dozen stations had raised the price of regular to $2.99 a gallon. But many stations were far below that, with a handful of stations below $2.30, including three in Woodstock: Costco, BJ's and Marathon.
The recent rise is a bit deceiving, making prices seem higher than they are in historical context. Prior to the attack, gas prices had been hovering at lower levels than in 2018. And they are still about 9 cents a gallon lower than a year ago.
Gas prices should typically fall as winter approaches, hitting a trough during the coldest weather when people do the least driving. Last year’s low in Atlanta was $2.05 in early January, according to Gas Buddy.
Prices generally rise through late spring, cresting around Memorial Day.
And while most of the recessions since World War II followed a spike in energy prices, the economy has been changing in ways that make the American economy much less vulnerable.
Vehicles now include hundreds of thousands of hybrids and electric cars. Even SUVs get much better mileage than the typical car did in the energy crises of the 1970s.
The supply side is also dramatically different. Between fracking and the opening of new oil fields, U.S. production is now the largest in the world. In years past, when world supplies barely kept up with demand, even small disruptions could send prices soaring.
However, that doesn’t make the U.S. invulnerable. America still doesn’t produce all the oil it uses and prices are set by globally minded traders, so the market for crude worldwide still can push the U.S. price upward.
The highest sustained gas price Georgia has seen was in the summer of 2008, when speculation in the oil markets sent the average price of gas at the pump to $4.11. The economy was already in trouble, but that summer's gas prices helped intensify what became the Great Recession.
Atlanta average gas price, gallon of regular
Friday: $2.68
Month ago: $2.49
Year ago: $2.77
High: $4.11 (July, 2008)
Source: Gas Buddy, AtlantaGasPrices.com, AAA Fuel Gauge
Top Ten Oil Producers, millions of barrels a day
United States: 17.87
Saudi Arabia: 12.42
Russia: 11.40
Canada: 5.27
China: 4.82
Iraq: 4.62
Iran: 4.47
United Arab Emirates: 3.79
Brazil: 3.43
Kuwait: 2.87
Source: Energy Information Administration
The 10 largest oil consumers and share of total world consumption
United States: 20%
China: 13%
India: 5%
Japan: 4%
Russia: 4%
Saudi Arabia: 3%
Brazil: 3%
South Korea: 3%
Canada: 3%
Germany: 2%
Source: Energy Information Administration
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