Gaza conflict spurs sudden gas-price hikes

By Johnny Jackson


Less than a week into the new year, oil traders are concerned that the Israeli-Hamas conflict in Gaza could disrupt the flow of oil from the Middle East.

The recent fighting in the region was enough to drive crude oil prices nearly $9 a barrel higher than a week ago on the New York Mercantile Exchange, which closed at $37.71 per barrel in the final week of December 2008. Crude oil closed on Jan. 2, on the NYMEX at $46.34 per barrel.

Retail gas prices went up about a nickel over the weekend in metro Atlanta, to more than $1.50 per gallon, on average, for regular unleaded gas.

This winter, gas prices have been the lowest they have been in more than four years. Officials said poor demand drove retail gas prices down, leaving suppliers with excess fuel in a recessive economy. "We are reminded this week that volatility in any part of the world can be worrisome, but when it involves the Middle East, the hypersensitivity of the oil industry increases exponentially," said Gregg Laskoski, spokesman for AAA Auto Club South.

OPEC said earlier this winter it would decrease oil production by about 4 million barrels per day to make up for the increased supply. More reductions could be possible, according to officials, as OPEC is scheduled to meet in Kuwait City on Jan. 19.

The national average gas price, and the average prices in the Southeast have increased every day since New Year's Day.

On Jan. 1, the national average was $1.61 per gallon of regular unleaded gas and is now more than $1.68. In parts of the Southeast, consumers are paying nearly a dime more for a gallon of regular unleaded gas since New Year's Day.

Still, gasoline prices are less than half what they were last summer, when metro Atlantans saw record highs above $4 per gallon, and consistently paid more than $3 per gallon.

Today's prices are 63 percent cheaper than the record high $4.11 set for metro Atlanta back in September 2008.

However, Laskoski warns consumers to remember that the industry is always volatile, and any major disturbance has the potential to send prices back up to the record-setting prices of the summer and fall of 2008.