Why are gas prices spiking in Massachusetts so soon after the war with Iran started?
The conflicts in Iran have only just begun, yet Massachusetts commuters are already seeing an impact at the pump. GasBuddy says fuel prices in the Boston area rose 10 cents to 30 cents per gallon overnight. The question is, how does that happen so fast?
"I was actually looking at the stock market this morning and saw that the price per barrel of oil went up," said Will Pesanelli, a local college student. "It's absurd how quickly the market can fluctuate and change. It definitely takes a big impact on my bank account."
Oil supply and Strait of Hormuz
Experts at GasBuddy say the issue stems from the Strait of Hormuz. Roughly 20% of the world's oil supply passes through that stretch of water along the Iranian coast.
"Here in America, we only get about 10% to 15% of our oil from the Middle East, and the rest comes from either the United States, Canada, Mexico. Basically, basically people who like us," said Matt McClain, an analyst for GasBuddy. "We are not going to run out of supply, but because crude oil is traded in the manner that it is using U.S. dollars, we are going to pay more for it at the pump."
McClain said the reason you see such a quick impact is because gas stations will be paying more for the next shipment, so they start raising prices immediately to cover it.
"That is what the convenience store is going to be paying the next time that a tanker truck, a fuel supply truck brings fresh loads of fuel to their convenience store," McClain said.
Prices won't fall as fast
If the conflict is resolved, McClain explains that the prices don't fall as fast as they spike.
"Typically, it never works that way because you remember they have already paid a higher price point for the gasoline that is sitting in their underground tanks, so that has to kind of drain out for it to economically make sense," said McClain.
He says the hike has only just begun. He expects gas prices to rise another 10 cents to 25 cents per gallon in the coming days and weeks.
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