BATON ROUGE — As the conflict between Israel and Iran has escalated, concerns have arisen locally about prices at the pump.

"Oh yeah. Among a lot of other things that I worry about, 100 percent. I think we're going to be affected," Juliana Boudreaux said while getting gas.

People at the pump also said they would not pay higher prices at the pump if it meant more stability overseas.

"Absolutely not. I've been to other states as well, where they don't have more connection to oil like how we do here. So I do believe that Louisiana has the potential to be able to supersede a lot of the things that are happening around the world," Itzel Ruiz said.

WBRZ spoke with Greg Upton, the executive director of LSU's Center for Energy Studies. He explained that oil prices have actually come down, and gas prices generally follow the pattern of crude oil prices.

"If you look at kind of the beginning of June, oil prices in the Gulf Coast region of the U.S. were trading at around 65 dollars a barrel. As you had the conflict start to escalate between Israel and Iran, what you saw is that the oil prices started creeping up there over about a two week period," Upton said.

During that two-week period of escalation, the price of oil went from about $65 a barrel to just over $75. Over this past weekend, when the United States made strikes against Iranian nuclear facilities, there was concern that prices would go up in response to further escalation. However, when markets opened up Monday, prices actually stayed stable. Upton said prices have come down to around $65 a barrel again.

"What's going to happen in the coming weeks and months, it's very, of course, difficult to predict what's going to happen geopolitically, but as of right now, we're kind of back to where we started," Upton said. "Markets are going to move based upon not only what's happening today, but what market participants perceive or project what is going to happen in the future."

Upton said the effects of this were always going to be much smaller than when Russia invaded Ukraine.

"Iran makes up about five percent of the global oil production," he explained. "Russia, for perspective, is the second largest producer of natural gas globally and kind of tied for the second or third largest producer of oil globally with Saudi Arabia. So the size of that shock was significantly larger than the conflict that we've seen over the last few weeks."

The United States is both the largest producer of oil and natural gas globally.

"We've seen about a decade and a half of sustained oil and gas production. We saw a little bit of an adjustment there during the pandemic, but that longer term trend has been upward," Upton said. 

He also said that a lot of the reason why we've seen a lessened impact of these geopolitical conflicts on that global price is because of the growth in the oil and gas production in the United States. 

According to Upton, gas prices, especially here in the Gulf Coast, have been low relative to historical standards.

"The reason for that is if you go back to the 2010s or so, you had the advent of Shale production from oil, you go back a few years before that, the advent of shale production of natural gas and this has really unleashed an increase in oil and gas production in the United States," Upton said. 

Another thing that was discussed was the Iranian parliament voting to close the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and then to the Arabian Sea, shipping oil all over the world. It is also situated close to Iran. Approximately 20% of the global production is shipped through the Strait.

"That's a lot of the uncertainty that analysts are watching is could you disrupt the supply of oil to the global market through the production itself or the transport of that oil to the global market," Upton said.
Upton said as the conflict escalated, the perceived risk was a reason why the price was likely increasing.

"As time has progressed and we haven't seen those supply disruptions, that's perhaps why markets have adjusted back and the price has sort of come back to that level we saw a few weeks ago," Upton said.
The vote by parliament would still require higher-level approval from Iran's Supreme National Security Council and their Supreme Leader, Ayatollah Ali Khamenei.