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July 4th gas prices highest since 2008 thanks to Iraq

Is $5 per gallon gasoline on the horizon?

By Money Staff Jul 2, 2014 4:08PM

This post comes from Myra P. Saefong a partner site MarketWatch.


MarketWatch on MSN MoneyDrivers heading out for the Independence Day holiday face the highest gasoline prices since 2008 thanks to Iraq tensions, but $5-a-gallon record-breaking prices are out of the question.


Crude prices haven’t even gained more than $1 a barrel on the New York Mercantile Exchange since turmoil in Iraq hit the headlines in the first half of June.


“North American oil prices have advanced by just a few pennies since Iraqi violence put a question mark around the future stability of supply, but U.S. consumers will still see the most expensive July 4th gasoline prices in six years,” according to analysts at GasBuddy.com.


Despite the fact that U.S. oil production is as high as it’s been since October 1986 and gasoline should be well supplied in all states during the holiday, “fear about what could happen if Iraqi exports fall prey to violence has altered the calculus for summer oil prices,” said GasBuddy chief oil analyst Tom Kloza.


Nymex crude futures closed at $104.35 a barrel June 10, when militants known as the Islamic State of Iraq and Syria (ISIS) captured Mosul, Iraq’s second-largest city. Oil futures have gained 99 cents since then, closing at $105.34 as of Tuesday’s settlement.


Fuel prices have also climbed, modestly — with the average price for regular gasoline up just about 2 cents since then as of Monday’s $3.676 a gallon, according to AAA.


“The big news to us is that gas prices were heading down before the fall of Mosul,” said Michael Green, a spokesman for AAA.  “Gas prices typically fall in June, but we didn’t see that this year due to the renewed conflict in Iraq. Most consumers are paying about 15-20 cents per gallon more than they would have been paying otherwise.”


AAA had predicted about a month ago that national average gasoline prices could decline 10 to 15 cents a gallon in June, as refineries complete maintenance and raise output for the summer driving season. But the “unexpected events in Iraq,” prevented that from happening, the leisure travel and motorist group said in its monthly gas price report.


The average price of gas in June was $3.67 a gallon — the most expensive for June since 2011 and the highest average for any month since March of last year, according to AAA.


Iraqi influence

The U.S. isn’t as dependent on Middle Eastern oil as it was even as recently as three years ago, according to GasBuddy.com, a source for real-time local gas prices.


Still, “the global market could be nervous about Iraq from now through the peak weeks of the Atlantic hurricane season,” and the “potential loss of all or part of the 2.6 million-barrels-per-day of Iraqi oil that moves to consuming countries may keep prices higher than they might be under more peaceful circumstances,” GasBuddy.com analysts said.


That makes sense, given that 66 percent of the price for a gallon of gasoline is crude oil.


Filling fuel tank © CorbisRyan Mossman, vice president and general manager of FuelQuest’s Fuel Services, expects gasoline prices to “curb to levels more in line with this time of year over the coming weeks unless the conflict in Iraq moves to southern Iraq, where the majority of the countries’ fuel supply lies.”


During the past three years, he said, retail gasoline prices have declined during the period between Memorial Day and June 25, pointing out a 2.3 percent fall in 2013 and declines of more than 7 percent each for that period in 2012 and 2013.


This year, however, they climbed 1 percent, said Mossman.


$5 talk

Higher-than-usual prices, however, don’t translate into record high prices.


An article in the New York Post that ran in late June suggested that Wall Street sees the possibility of $5-a-gallon gasoline this summer.


That’s “not likely” — even if the world sees a total loss of Iraqi exports, said GasBuddy’s Kloza.


"The closest we ever came to $5 a gallon gasoline was October 2012, when a cluster of California refining problems sent prices [in that state] to about $4.67 a gallon,” he said. “Pump prices spent little time there and dropped by more than $1 a gallon by year’s end.”


If the market lost the 2.6 million barrels a day of Iraqi oil exports, the world would see global oil prices move above $125 a barrel or maybe even $135 a barrel, but those prices would be limited to continents other than North America, he said.


For the U.S. to see $5-a-gallon gasoline or higher, U.S. crude prices would have to top $175 a barrel, according to Kloza, who points out that with U.S. crude at a discount to world crude, the U.S. is a “bit insulated.”


For now, he said the national price for a gallon of regular gasoline this week and for the holiday weekend is likely to average in the $3.67 to $3.70 neighborhood.


And that’s not likely to faze holiday travelers.


AAA forecasts that 41 million Americans will travel 50 miles or more by car during the holiday weekend despite the high gas prices. That’s up 1.9 percent from the number who traveled last year and up nearly 14 percent from those who traveled during the Memorial Day weekend. 


More from MarketWatch

42Comments
Jul 2, 2014 5:32PM
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What a piece of self-contradictory drivel.

The headline and first sentence scream "... thanks to Iraq".  But the second paragraph states "Crude prices haven’t even gained more than $1 a barrel on the New York Mercantile Exchange since turmoil in Iraq hit the headlines in the first half of June" and the third paragraph states "North American oil prices have advanced by just a few pennies since Iraqi violence put a question mark around the future stability of supply ..."

So, how much is the Iraq situation to blame, really???

We have the highest gasoline prices since 2008, yet were informed just this year that the US now produces so much crude oil that we are beginning to export large quantities.  What's up with that????
Jul 2, 2014 4:20PM
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Iraq... uh-huh. THAT's the reason. Meanwhile, oil companies are pocketing billions upon billions in profit while exporting oil, as the public scrounges for ways to stay afloat/survive. Makes perfect sense...
Jul 2, 2014 6:05PM
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Total BS. Iraq doesn't provide that much oil to the US  and crude oil has stayed within a dollar since all this happened. Go watch a reliable news source and the come back and correct this total bs story.
Jul 2, 2014 6:02PM
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Wait the media isn't blaming the weather this time?  Its a miracle.

This is obamas fault.  obama insisted we pull all troops out.  AS soon as that happened ISIS started taking over iraq.  Here we are 2 years later, and iraq is in shambles BECAUSE OF OBAMAS POLICIES!

Now obama is sending troops back in.  This all lies directly on obamas shoulders.

Jul 2, 2014 10:14PM
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Thanks  to Iraq, thanks to Iraq, thanks to Iraq? I think it is thanks to Obama and his stupid foreign policy!!!!

Jul 2, 2014 6:57PM
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"Despite the fact that U.S. oil production is as high as it’s been since October 1986 and gasoline should be well supplied in all states during the holiday, “fear about what could happen if Iraqi exports fall prey to violence has altered the calculus for summer oil prices,” said GasBuddy chief oil analyst Tom Kloza."

Wow, yet another Bought and Paid for by Big Oil Farce analyst. Go figure. Meanwhile we export more and more of our finished products and the Real Americans Suffer yet Again. More Production in America in the FACE of less DEMAND in America means higher prices. Only in America Folks.
Jul 3, 2014 7:33AM
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The End of a Dream

            It didn’t happen all at once, but the dream that was the United States of America, the Great Republic, has died. Other countries hostile to the idea of true freedom didn’t cause it; it wasn’t caused by a radical religious organization. The downfall of the United States was all from within its own borders, by its own people. The people, for whom others have died, have allowed the country to die a slow death. The me too, me first attitude that started many years ago, along with the idea that all are entitled to the fruits of others hard work, has allowed this country to bleed to death. When the British raised the tax on tea, our forefathers should have just shut up and paid the tax. Almost 240 years later, what has changed? Thousands have died for absolutely nothing.

Jul 2, 2014 6:16PM
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National average prices don't tell us much when gasoline prices in California have hovered at $3.90 to $4.00 per gallon for months.
Jul 3, 2014 8:43AM
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July 4th gas prices highest since 2008 thanks to GREED!!
Jul 2, 2014 6:04PM
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higher gas prices are a direct cause of obamas foreign policy in iraq
Jul 3, 2014 9:59AM
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jdmeck writes below "who owns the oil" then makses a fair case on the oil companies right to do what they want. But here is my beef. Rivers and streams that run through private land are not owned by the land owner so niether is the oil in the ground. It crosses boarders and is owned by all US citizens. I have no problem with oil companies exporting oil, gas or any other by product for what ever they can get on the global market. But if the government can try and tell me what size coke I can drink or put restrictions and taxes on just about everything they can pass a law that allows oil companies to export as much as they want for however much they can sell it for as long as a researve is kept in the US along with a designated amout to fufill our needs at a much lower cost allowing America to prosper once again. Every over priced gallon of gas we buy drives the US deeper into a recession and we will never recover unless we either thin the herd or make the one thing that drives the cost of everthing more affordable for consumers and busnisses.

Jul 3, 2014 2:10AM
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well at least you don't have a yacht a plane a Ferrari  that consumes oil like it'll never run out.
Jul 3, 2014 10:06AM
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Iraq does not affect the oil price, because Mr. al Naimi, the Saudi oil minister, stated that Saudi Aramco, will make-up all short-falls in the global oil market. The southern, oil-producing region of Iraq has not been affected the ISIS, so there are no shortages in Iraqi oil production. The Big Oil/Wall Street cabal and their media pundits are always coming-up with phony excuses to increase the oil price. Google and read the "Global Oil Scam."
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Oil is not bought a day in advance then suddenly refined at your local pump the next day. This is due to the price they paid months ago and you won't see the true price of gas due to Iraq until around September.

 

Jul 3, 2014 4:22PM
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You mean thanks to GW? Iraq was a functioning stable country before GW sent in the troops.
Jul 6, 2014 6:24PM
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The best way to counter high gas prices are to slow down.  A 10 mph reduction of speed can save 15-20% on gasoline.  In other words it increases your fuel efficiency by the same, which doesn't hurt the planet or your wallet.  Another good way to counter it is to save in other places.  Use this as a reason to make all of your spending more efficient.  I did this recently, and these were the top things that helped me save money:

1. Review your car insurance regularly, the big guys like geico and esurance change their pricing every year.
2. Do what Suzey Orman recommends and trade in expensive whole life policies for Term life. Mine from Life Ant costs $19 a month and I can sleep at night knowing my family is secure if anything happens to me. 
3. Don't waste money in bars. They are the biggest frivolous expense in a lot of lives.
4. Get rid of financial advisors who do not bring you any value. The 1% a year they cost adds up to enormous sums over a lifetime.
5. Don't be above using coupons.
6. Pack a bag lunch most days. Save money by eating out less in general.
7. Don't put the cart before the horse.  Only buy things when you actually have the money, not on credit because you will make the money over the next year and think that you will pay back credit in a hurry.  It rarely works this way.  Reserve credit for emergency expenses and homes.
Jul 5, 2014 1:12PM
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Actually it probably has more to do with the federal government holding up the keystone pipeline which would have dumped new reserves right in our country at a time when we don't want to be dependent on the mid-east.
Jul 4, 2014 7:52PM
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Greed, just Greed! we got to vote all these clowns out and put new faces in place.

Jul 7, 2014 9:30AM
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Mabey it will get to 5  dollars and then people will wake up and really start paying attention to why their being goulged.
Jul 3, 2014 12:12AM
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No, it is thanks to our so called "ally" in the Middle East, who started every war since 1948, including the 1973 war, and continues to resist any peace by doing the opposite and causing disruption within it's neighbors borders - otherwise we would still being paying below a dollar a gallon for gasoline and diesel fuels. 
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