Latest Middle East conflict shouldn't boost gas prices

Gary Strauss, USA TODAY | USATODAY

Rising Middle East tensions are boosting crude oil prices again, but are unlikely to impact U.S. gasoline prices for now, experts say.

As Israel massed tanks and troops along the Gaza Strip and Palestinian militants launched hundreds of missile strikes deep into the country, crude oil futures spiked 1.3% to nearly $87 a barrel on the New York Mercantile Exchange Friday. Behind the third straight price jump: fears that a broadening of the conflict could cause supply disruptions from oil-producing countries in the region, which supply about 20% of the world's oil.

Last winter, crude oil spiked to about $100 a barrel when Iran threatened to cut off supplies. "The elephant does seem to be back in the room,'' says Patrick DeHaan, senior analyst for price tracker gasbuddy.com.

Offsetting a potential jump in gas prices: lower demand and ample supplies, fueled in part by rising U.S. production U.S. crude oil inventories are up about 11% from year-ago levels.

Gas prices have been dropping sharply in the past month, with Saturday's national average at $3.42 a gallon, down 32 cents from $3.74 a month ago, according to the Oil Price Information Service. Prices have dropped even more sharply in California, where refinery and supply woes that drove prices to $5 in some markets have plummeted nearly 80 cents the past month to $3.80 a gallon.

Rising production and slow global economic growth have helped keep prices down, muting a major war-related spike in crude oil prices. Last week, the International Energy Agency cut its global oil-demand forecast through year's end by nearly 300,000 a day, based on the weak European economy and residual effects of Super storm Sandy in the U.S.

"Unless there are signs of further destabilization in the region, rising prices is kind of a non-story,'' DeHann says. "I don't see a dramatic bump in prices, at least for now."