With the recent Middle East violence, gas prices rose 1.2 cents making the national average $3.686 per gallon, according to Energy Information Administration (EIA) figures for June 16. This is six cents higher than the same time last year. If prices stay above $3.652 a gallon next week, they will hit the highest price for this time of the year since 2008.
AAA had previously predicted drivers would pay relatively high prices this summer, ranging from $3.55 to $3.70 per gallon. “But that range may be higher if unrest in Iraq disrupts oil production in the region,” said AAA Idaho spokesman Dave Carlson.
The Iraq violence hasn’t spread to the south, which the EIA says is home to three-quarters of Iraq’s crude output. The country’s 2.58 million barrels a day of exports in May were all from the south, Asim Jihad, an oil ministry spokesman, said June 1.
“If things deteriorate even more, the spike could be even bigger than that,” Phil Flynn, senior market analyst at Chicago-based Price Futures Group, told Bloomberg. “If it weren’t for the situation in Iraq, gasoline would be coming down by now. This will probably keep it elevated all summer. It’s really disappointing.”
If it weren’t for this escalating situation in the Middle East, Americans would have enjoyed a summer of reasonably-lower gas prices.
“June is usually when gas prices go down,” Patrick DeHaan, senior petroleum analyst at GasBuddy.com. says. “Unfortunately, you never know when the Middle East will evolve into a full-blown situation. There’s forecasting, and then there is trying to forecast world events into your forecast. The crystal ball is never able to predict this stuff.”
While gasoline prices will remain seasonably high through the summer, a more “stabilized” situation in Iraq would slow the gain at pumps, Michael Green, a spokesman for Heathrow, Florida-based AAA said. “We’d expect a slow rise in gas prices over the next few days, but we’re not expecting anything dramatic unless the situation further deteriorates in Iraq.”
EIA had projected prices to average $3.66 per gallon for the month of June, although this is dependent on the situation in Iraq, petroleum economist Sean Hill told Bloomberg. “As things stand right now, you’re looking at probably somewhere around a five- to 10-cent jump,” he said.
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