Will death of King Abdullah impact gas prices?
HOUSTON – A new era in Saudi Arabia could impact gasoline prices. After the death of King Abdullah, many are asking if this will affect the price of oil.
Too much crude oil and falling demand have driven down the price at the pump. But the death of Abdullah could drive up the cost of a barrel of crude in the U.S. and keep more people working in the energy industry.
"I don't expect it to have a long-term effect on crude prices," Dr. Richard Sindelar, at the University of St. Thomas, said. "I think they're up today a little bit out of uncertainty about what the Saudis might do."
Sindelar is an assistant professor at the Center for International Studies at the University of St. Thomas. He doesn't see the Saudis cutting oil production.
"It would help the U.S. market if they'd choose to do that," Sindelar said. "The problem with reducing production is then their customers don't get the oil and they go elsewhere so they lose market share, and that's why they've changed this time around."
The benchmark U.S. crude futures rose more than $2 a barrel immediately after the king's death was announced. Some believe the Saudis want to break the backs of oil producers in the U.S., Iran and Russia.
Sindelar says the succession was established long before Abdullah died.
"In the consensual Saudi governance system, they've worked all of that out before," Sindelar said. "It's pretty clear to me that they're retaining production goal as opposed to trying to adjust prices."
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