The global uncertainty in the wake of a drone attack on Saudi Arabian oil fields that’s roiled commodities markets across the world will hit gas prices in New Jersey.
Per-gallon prices in New Jersey remained stable Monday. But analysts say Garden State motorists could end up paying a dime to a quarter more by the end of this week. Beyond that, the analysts don’t know how much deeper motorists will have to dig.
The weekend attack on a Saudi Arabian oilfield and processing complex temporarily knocked out 5% of the world’s oil supply, or 5.7 million barrels a day. Crude-oil prices jumped as much as 10% on the commodities markets, spikes that rivaled levels hit during the run-up to the 1991 Gulf War.
“We’re hearing from analysts that it’s possible that we could see an increase of about 25 cents per gallon,” said Tracy Noble, manager of public and government affairs at AAA Mid-Atlantic. “We did see an increase in the price of crude oil of about $5 per barrel, that does tend to indicate prices could jump, but we really don’t know what the end result is going to be right now.”
It’s uncertain how soon the Saudi’s can resume production. Damage looks extensive, although kingdom authorities have said they expect to restore a third of lost production soon.
Iran-based Houthi rebels in Yemen — locked in a proxy war with Saudi Arabia — claimed they launched the drone strike. But U.S. officials blamed Iran — which denied the accusation.
The new violence has led to fears that further action on any side could rapidly escalate a confrontation that’s been raging just below the surface in the wider Persian Gulf in recent months. Those tensions have increased ever since President Trump pulled the U.S. out of Iran’s 2015 agreement with world powers that curtailed Iranian nuclear activities and the U.S. re-imposed sanctions that sent Iran’s economy into freefall.
In the wake of the drone attack, Trump tweeted, “There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”
Sen. Bob Menendez, the ranking member of the Senate Foreign Relations Committee, derided that as a “Rambo attitude.”
“’Locked and loaded’ is not the language the President of the United States should be engaged in when we are talking about the sons and daughters of America in a precipitous attack without knowing all the facts,” the New Jersey Democrat said. “He needs to show us what is the intelligence, what is the evidence, and — in my view — if you’re going to take such an action you need to get Congressional authority for the use of military force.”
Menendez did approve of the President’s decision to deploy oil from the U.S. Strategic Petroleum Reserve, which holds 645 million barrels. Trump tweeted, “PLENTY OF OIL.”
Some motorists on the Garden State Parkway said they would roll with the punches. Others were expecting to take a hit.
“I’d limit my driving, if gas prices go up,” said Barbara Maltese of Saddle Brook. “That’s the best way you can do it.”
The pump price at the Brookdale Rest Area in Bloomfield was $2.66 for a gallon of regular.
“I’m on the road about three or four times a week, up and down the Turnpike and the Parkway, so it’s going to have an impact,” said Arthur Hood of Teaneck.
“It’s tough,” said Jason Barker of East Orange. “There’s no way to compensate for it. You have to drive every day.”
“You know, what are you going to do? They’ve, kind of, got you over a barrel,” said Mike Alicea of Hazlet.
It’s the impact on consumer confidence that concerns analysts. Consumer spending makes up 70% of the U.S. economy, a main support for a system that’s already buffeted by US-China trade wars and manufacturing slowdowns.
“Consumers are thinking, “Oh, here we go! Oil prices — Look at the paper! Look at the news! — oil prices are going up!” said Farrokh Langdana, a professor at Rutgers Business School. “Then we might see consumer confidence leveling off and falling. And that would not be good because that’s the one engine on the plane that’s still running well. The other engines have kind of calmed down and shut down, actually.”
Saudi authorities say they will have an update on the state of repairs tomorrow. In the meantime, oil prices are expected to remain volatile.
This story contains material from the Associated Press.