Turmoil in Iraq is pushing up U.S. gasoline prices

Drivers are being deprived of usual price break between Memorial Day and 4th of July
Associated Press
Jun 19, 2014

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 Fourth.

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.

Higher fuel costs can reduce economic growth — in the U.S. and around the world — because they raise costs for businesses and leave drivers with less money to spend on other things.

In the U.S., a ten-cent rise in the price of gasoline only costs a typical driver an extra $1.50 to fill up a tank, but if that rise is sustained over a year it costs the U.S. economy $13.5 billion.

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, and analysts expect more increases over the next couple of weeks.

Higher crude prices generally make for higher fuel prices around the world, too, but the effects on drivers vary widely.

In many countries, gasoline prices are subsidized, so drivers don't see the effects of price changes quickly. In other nations, especially in Europe, fuels are taxed so heavily that a moderate change in the underlying price of fuel is hardly noticed.

How the situation in Iraq plays out is hard to predict, but analysts note that the global market is well-supplied with oil and fuels. Morgan Stanley wrote in a recent report that the potential for a significantly higher sustained oil price was "limited without a major disruption," and that "the conflict will likely be contained primarily North of Baghdad, limiting the impact on oil exports."

But drivers in 15 states are already paying more for gas than they have since March of 2013, according to Kloza. The national average will likely soon surpass this year's high of $3.70 per gallon, set on April 28.

Kloza thinks the national average may get close to last year's high of $3.79 per gallon, but he does not expect to see it reach the highs of 2011 and 2012, when it rose above $3.90 per gallon.

And the chances of the average crossing the $4 mark?

"The (last place) Mets have a better chance of winning the World Series," he said.

 

Comments

lugnut2511

One reason we should of never opened up exporting oil to begin with, another Obama F up.....So sick of the this countries ran. Maybe it's time to move up north n leave the citizen ship behind..

jazzbo

Thank Mr.Bush and Mr.Cheney for the mess they made in Iraq.

Donegan

Remember that libtard chant about people who complained about Obama "We Won"? You seem to forget you won 6 years ago and this is no longer a Bush mess, This is a Obama mess.

jazzbo

Q. Why do the Republicans have an elephant as their symbol ?

A. Because it takes a long time to clean up after an elephant after it passes by.

Wjones44

Are we 12?

jazzbo

Did you forget when your birthday was ?

Donegan

I like your joke. As a independent i agree with it especially if the scooper guy is a Democrat, It takes ages to get those people to do anything besides campaign and play golf.
Q. How many Democrats does it take to screw in a light bulb?
A. Just one, but it really gets screwed.

jazzbo

I doubt that an Independent (aka. Republican lite) would be any better.

Donegan

Your intolerance is showing again. Remember that your party will beg the independents to vote for them the closer it gets to election day. They know they have you people sewn up because you cannot think for yourself anyways.

jazzbo

You a fuuny man.

From the Grave

You all argue over who the problem is, while they ALL ram it up our as ses and nobody seems to notice.

jazzbo

You can't see the difference between the two parties ???

Donegan

I see the difference perfectly. One steals money to pay off their buddies in the military complex to get campaign donations and the other steals money to pay off their buddies in the banking and social arena to get campaign donations. Not a large difference seeing that the middle class ALWAYS get screwed no matter who is in charge.
There was a saying "I want to keep the Democrats out of my wallet and the republicans out of my bedroom" But after Democrats DOMA and the republicans Tax hikes they are interchangeable.

Peninsula Pundit

That's a valid observation, Don.

Bottom Line

Enough with the Bush blaming for every fault of this president. That's the weakest argument one could possibly make. I think he's (sadly) been in office long enough... And a president doesn't "inherit" problems from a previous regime. He CHOOSES to run for the position accepting the responsibility of improving our nation. I could somewhat understand if this was a year or two at the most in his tenure. Just like it took Reagan a couple years to clean up the mess from the now 2nd worst president of all time who preceded him.

Wjones44

Carter is 2nd worst.

Wjones44

Odingleberry is 1st.

Wjones44

Great job Odumba you idiot! Resign already!

ladydye_5

Where is all the domestic oil? Thought we were producing more than ever???? Why are we at the mercy of the market? We have our own!!!

lunchtime 175

That is true, where is all the oil being produced in the united states? and the ethanol was suppose to reduce the need for foreign oil. I think all cars and trucks should be made to run on the eco friendly fuel mix of 85 percent ethanol, right now that is running about $2.85 a gallon in northwest ohio. All we need is enough factories to produce the ethanol and enough farmers to plant more corn to supply the ethanal factories and we will see a reduction in oil consumption here in the states. Every time we here about a foreign country having problems it seems to translate into yet higher gas prices at the pump when that oil is still in the ground or in tanks in storage and not the gas we are buying today. Maybe everyone should ride a bicycle and see the oil companies scramble to lower prices at the stations.

From the Grave

Nobody will ever lower a price that consumers have shown that they WILL pay.

KnuckleDragger

LOL. I drive a flex fuel vehicle. Please tell me a place in NW ohio that has E85 for 2.85? The cheapest I've seen it is $3.45. Due to the fact that you get less mileage on E85 it is not economical to use it unless it is $1/gal less than gas.

Wjones44

Where's my Teleprompter!

jazzbo

Where's my wrinkled shirt ?

dontknowmuch

jizzbo... you're mom's wearing it

jazzbo

dontknowmuch-

You don't know what I'm referring to , do you ?

freespeech1

Are you referring to obamas wrinkled shirt he was sleeping in when Benghazi was being attacked? Or when IRS emails and computer hardrives were being destroyed, oops I mean recycled? Or the time he was sleeping when guns were being given too drug cartels? Or maybe it was the shirt he was sleeping in, when he single handedly destroyed our healthcare system? Or is it the shirt he was wearing while our borders were being overrun by CRIMINALS!

jazzbo

No , none of that Right-wing slander.
I'm talking about the wrinkled shirt that Bush wore during his presidential debate with Kerry.
Dont you remember ?
The shirt that looked like a wire with a listening device running up the back ?
The shirt that prompted him and told him what to say ?

http://www.salon.com/2004/10/30/...

( By the way , pull your head out of the Right-wing toilet bowl.)

freespeech1

That's funny, Obama has one right in front of his face telling him what to say, and I must say the person typing on it is a moron.

jazzbo

If you had followed the thread , you would have seen that I was responding to Wjones44.

Bush had a moron on his end.
Bush performed a lousy debate.
( Actually , there were morons on both ends.)

Pages