How The Conflict In Syria Impacts Gas Prices In The USA

The seemingly imminent U.S. strike against Syrian President Assad will certainly influence gas prices within the United States. The question is How much? The answer? No one knows and no one can predict the connection between conflict in the Middle East and oil and gas prices elsewhere in the world.

syria flagTo be sure, plenty of factors influence the price of gas and those factors are not all resident within the Middle East. A strike among Libyan oil works, continued unrest in Egypt, and political crises and economic uncertainties around the world all influence the price of gas. Keep in mind that while oil prices are standard worldwide, gas prices are not. The U.S. typically pays lower gas prices than do other nations. Other factors influence the price of gas in the U.S. including lesser demand with the summer driving season over, higher demand for oil and natural gas products with the winter season coming, and so on.

Thus, the question of the impact of strikes in Syria on the price of gas in America needs to be taken in context with all the other issues happening in the world. Yeah, it’s a little complex.

Syria is a small player in the field of oil and gas, so strikes will not have any direct impact on gas prices. Estimates put Syrian oil production at 50,000 barrels per day, less than one ten thousandth of a percent of worldwide production. Neither is the U.S. dependent upon Syria for oil. Besides, with the current high price of gasoline in the States, President Obama would not risk an increase in gas prices if he and his advisers thought a strike would result in such. You can be sure that the President of the United States has plenty of accurate prediction models at his fingertips. Even if he is concerned about the use of chemical weapons by a nation against its own people, President Obama is surely more concerned with slowing down a fragile economic recovery with his potential actions and the resulting negative affect upon his legacy.

U.S. consumers have also noticed that the price of gasoline is not directly proportional to crisis or economic certainties. When we expect gas prices to go up, they drop, and vice versa. However, one thing is certain about the Syria question: it produces uncertainty.

Uncertainty is what drives the oil markets and the uncertainty related to Syria isn’t so much whether the U.S. strikes, rather, it is the response of neighboring nations in the Middle East. Much is being said about a proxy war between Saudi Arabia (and the U.S.) and Iran (and Russia). If the U.S. does strike and other nations get involved or retaliate, that would almost certainly create further uncertainty and drive up the prices at the pump.

Russia may be the key factor here because they are a large oil player on the world stage. If they continue to support Syria, it could awaken Cold War hostilities as all nations take sides. This could cause supply disruption, attacks on pipelines and oil tankers, and outright war that drives additional uncertainty.

The likelihood though is that the strikes will be limited and short in duration, and all of this uncertainty will go away.