The recent attack on Saudi oil facilities that knocked out half of that country's daily oil production is having an impact at the local gas station. The average gas price rose 12 cents in Texas in the first week after the attack, as crude oil prices initially jumped 15-percent before subsiding a few days later.
The Saudis have pledged to have their facilities back up and running soon, but in the meantime the uncertainty in the world markets has caused a ripple effect that's being felt all the way here in the Lone Star State. That is because, despite Texas oil production helping to ease the impact of the Saudi attack, we still import some oil from Saudi Arabia---and that oil is used to produce gasoline. "Just because we don't import very much oil from Saudi Arabia anymore, doesn't mean that we're divorced from that market," says Ed Hirs, Energy and Natural Resources Fellow at the University of Houston. "The consumer here at Westheimer and Shepherd is competing with the consumer in Tokyo for the same barrel (of Saudi oil)."
Still, Hirs says the world market is in good position to absorb the setback in Saudi production in the long run. "The Saudis have been planning on having somebody attack them somewhere for the last four decades," he says. "They have stockpiles (of oil) around the globe, they have workarounds in place, and the U.S. has a strategic petroleum reserve."
Hirs tells KTRH that gas prices will likely follow crude oil prices in stabilizing, as long as the interruption in production is brief. "On the other hand, if this (Saudi) oil field is down and we continue to lose five million barrels a day for 6 to 12 months, then we're going to see a very significant impact in price," he says.