Louisiana gas prices likely to rise due to Iran war | Business News

The war in Iran is sending shock waves across global energy markets that are likely to reach Louisiana, first through rising prices at the pump and, if the conflict persists, with companies in the state potentially looking to increase production of oil and natural gas.

Gasoline prices are tied directly to the price of crude oil, which rose 6% on Monday to nearly $72 a barrel as the U.S. continued to unleash air strikes and Iran retaliated by firing missiles at Israel and U.S. targets across the energy-rich Middle East.

President Donald Trump said the attacks could persist for weeks in the Persian Gulf region. The Strait of Hormuz, which is the transit point for roughly a fifth of the world’s oil supply, was virtually closed to maritime traffic.

Tyler Gray, director of innovation at the LSU Energy Institute, said disruptions in the oil and gas market thousands of miles away can show up in south Louisiana within days. That’s not because production is scarce, but because of how oil and gas is priced on the global market.

“The impact of these disruptions depends on their duration and severity,” Gray said. “Short term price swings may be manageable but prolonged issues could significantly raise costs.”

That means gasoline prices, currently averaging around $2.50 a gallon in Louisiana, will likely rise in the coming weeks, though it’s too soon to say how high.

Natural gas prices, which heat and cool homes, also are rising, which could mean that ratepayers in Louisiana, still reeling from sticker shock after February’s freeze, will face higher utility bills.

Global supply chains

The war comes at a time when the U.S. is less dependent on foreign oil than it ever has been. The U.S. produces more than 70% of what it consumes – some 13 million barrels of crude oil per day.

Of that, about 80% is refined in Texas and Louisiana, according to Eric Smith, an associate director of the Tulane Energy Institute.

In that respect, the Gulf Coast and, to a lesser extent, the rest of the country, is seemingly less vulnerable to the effects of a conflict in and around the Middle East and Arabian peninsula than it was, say, during the 1970s energy crisis.

“We have plenty of oil and plenty of refining capacity,” Smith said. “That’s not the issue.”

But global supply chains are deeply intertwined, and exporting the oil and natural gas now mined from offshore Gulf waters and the shale formations in Texas and north Louisiana will be more difficult and expensive with key shipping lanes clogged or closed because of the conflict

“Oil and LNG exports can continue, but if you are having trouble sending your ships around the world it makes it more difficult to sell,” said Jim Richardson, LSU Professor Emeritus.

Experts say it’s too soon to say how much prices might rise, because there’s no telling how long the current conflict will last and how widespread the collateral damage will be across the Middle East.

In the short-term, however, they say the uncertainty and risk will drive gasoline prices up, which could spill over into price increases for other goods and services.

“Markets respond swiftly to perceived risks, and the effects are often visible at the pump before any physical supply constraints materialize,” Gray said. “This means increased transportation costs, food prices, and industrial input costs.”

More drilling?

When President Trump took office in early 2025, he said one of his priorities was to further increase domestic oil production.

One reason that hasn’t happened is because oil prices have hovered around $60 a barrel, too low, experts say, for drillers to justify the cost.

But if the war were to persist, cutting off supplies of oil and natural gas to buyers in Europe and Asia, domestic production along the Gulf Coast could increase, which could lead to more job creation in Louisiana and benefit the companies that do business here.

Such a scenario would be good for producers, experts say, but likely at the expense of consumers, who would feel the effects of higher prices throughout the economy.

“Two things can be true at once,” Gray said.

Still, building out new production and refining capacity wouldn’t happen overnight. Smith doesn’t think it’s likely because of the financial risk oil companies would be taking.

Another potential long-term impact could be a market-driven response to more renewable energy sources like wind and solar power, which have been stymied by the Trump administration. 

But those projects also take years to develop and wouldn’t have any impact on the supply chain and available sources of energy. For now, consumers in Louisiana need to brace for higher prices, though how much higher and for how long remains to be seen.

“It depends on whether this lasts for a month or a year,” Richardson said.