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The incursion into Israel by Hamas triggers fears of soaring gasoline prices

MICHEL MARTIN, HOST:

If you were around in the 1970s, then you will remember how conflict in the Middle East sent gasoline prices soaring. Ever since then, there have been fears of that happening again. This weekend's attacks in Israel did send tremors through the global energy market. But so far, at least, the pain has not stretched to U.S. gas pumps. NPR's Scott Horsley has more on this.

SCOTT HORSLEY, BYLINE: Oil production in Israel typically refers to olive oil, not crude oil, but the country does sit in the middle of an oil-rich neighborhood. So energy expert Amy Myers Jaffe of New York University says it's no surprise the global price of crude spiked after this weekend's attack on Israel by Hamas and Israel's retaliatory strikes in Gaza.

AMY MYERS JAFFE: Whenever missiles fly in the Middle East, that creates upward pressure in the oil market because there's always this fear that the conflict will escalate.

HORSLEY: Energy traders are trying to handicap the possible ripple effects. What would happen to global oil supplies if a potential diplomatic opening between Israel and Saudi Arabia is sidetracked or if Iran's oil exports become the target of more rigorous sanctions? Oil prices jumped about 4% on Monday, but they're still lower than they were a week ago. And U.S. gasoline prices have come down significantly over the last month. Energy analyst Patrick De Haan, who's with GasBuddy, says a number of seasonal factors are helping to keep a lid on pump prices. Refineries have switched to a winter blend of gasoline that's cheaper to make. And with kids in school and leaves turning color, Americans are just driving less.

PATRICK DE HAAN: There is a lot of downward movement that will offset, for now, the rise in the price of oil because the seasonality in gasoline is overpowering what's happening overseas.

HORSLEY: De Haan thinks even if tension in the Middle East sends oil prices soaring towards $100 a barrel, the effect on domestic gasoline prices should be muted. On the other hand, if crude oil prices stabilize, he says drivers could get a break, with pump prices falling by another 20 to 45 cents a gallon.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
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