Violence in Iraq is pushing U.S. gasoline prices higher during a time of year they usually decline. The average price of $3.67 per gallon is the highest price this time of year since 2008.
WILFREDO LEE • Associated Press,
Turmoil in Iraq is pushing up US gasoline prices
- Article by: JONATHAN FAHEY
- Associated Press
- June 19, 2014 - 7:49 PM
Violence in Iraq is helping to make gasoline in the U.S. more expensive, depriving drivers of the usual price break between Memorial Day and July 4th.
Global oil prices have risen 5 percent since an insurgency took over two Iraqi cities. Any sustained increase in oil and gasoline prices can damp economic growth.
In the U.S., the average price of $3.68 per gallon is the highest price for this time of year since 2008, the year gasoline hit its all-time high. The good news is that gasoline is not likely to spike above $4 as it did 6 years ago, experts say. Or even cross $3.90, as in 2011 and 2012.
“You are going to pay a little more than we thought you were going to pay,” says Tom Kloza, chief oil analyst at the Oil Price Information Service and GasBuddy.com. “But you are not going to see any apocalyptic numbers.”
Gasoline prices typically fall in the weeks following Memorial Day, after supplies increase enough to fill up the cars of the nation’s vacationers as summer approaches. Prices have declined during the previous three Junes, by an average of 21 cents per gallon, according to AAA.
This year, drivers are paying more. The average has risen every day for a week, and is now higher than it was on Memorial Day — with more increases sure to come.
The average gas price so far this year, however, is still 5 cents cheaper than it was last year over the same period.
Even before violence in Iraq broke out, gasoline prices were falling more slowly than expected because of rising U.S. fuel demand and extensive maintenance at some Gulf Coast refineries that reduced gasoline output.
Then, last week, Iraqi insurgents seized a pair of cities and pledged to attack Baghdad. None of Iraq’s oil fields were targeted — most are far away from the fighting — and oil exports have continued to flow. But Iraq is OPEC’s second-largest exporter, so concern that oil production might be impacted has been enough to send global oil prices up by $6, to around $115 per barrel.
The average price of gas rose 3 cents per gallon during the past week.
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