(MCT) — While some predicted gas prices to drop in June, violence in Iraq triggered increases around Iowa and the United States as we head into summer travel season, according to some industry observers.
Average prices of $3.56 per gallon for regular unleaded gas in Iowa and $3.68 per gallon nationally on Wednesday were as high as they’ve been all year 0.04, 0.035, 0.004, 0.003, 0, 0.017, 0.088, 0.152, 0.187, 0.22, 0.255, 0.257, 0.287, 0.304, 0.359, 0.391, 0.421, 0.392, 0.376, 0.373, 0.382, 0.398, 0.382, 0.394, 0.412, and mark the highest prices to start summer in six years, according to AAA and the Energy Information Administration.
“That is what has caused the increased prices at the pump,” Gail Weinholzer, director of public affairs for AAA Minnesota/Iowa, said of turmoil in Iraq. “Although, most of the increases have been relatively minimal.”
At the beginning of June, AAA said gas prices had decreased by an average of 21 cents per gallon over the past three Junes, and speculated that a 10 cent per gallon decrease was possible if refinery production increased as expected.
However, gas prices jumped on average 8- to 10- cents a gallon after the fall of Mosul, Iraq on June 10, and the price of crude oil jumped about $5 from $102 per barrel to $107 in that time, according to statistics from AAA and Bloomberg.
AAA said on June 23 that gas prices had climbed for 12 straight days, although they’ve held steady since then. Crude oil was trading at $106.50 per barrel on Wednesday.
While unrest in Iraq can have ripple effects on prices in the U.S., only a small portion of U.S. oil actually comes from Iraq.
In 2013, the U.S. got 340,000 barrels of crude oil per day from Iraq, but that only accounted for about 4 percent of all crude oil imports, according to the Energy Information Association.
Tom Kloza, chief oil analyst with GasBuddy.com and founder of Oil Price Information Service, said in many places, after an initial increase, the prices have started to recede.
“Our sense is this was not a game changing event in Iraq, although there is potential for that if fighting descends into Baghdad and southern Iraq where the bulk of oil export come from,” Kloza said.
Kloza said if Iraqi oil were removed from the world oil supply it would have a big impact, but he doesn’t expect that to happen. He said a more direct concern is hurricane season in the Gulf of Mexico.
Hurricanes don’t tend to have much of a lasting impact on crude production, but they can knock out critical gasoline production at the worst times, he said.
“The thing I’m worried about is what happens in the Gulf of Mexico when hurricane season hits the mid innings,” Kloza said. “That could have a much bigger impact on U.S. oil.”
Kloza said he anticipates gas prices holding fairly steady the rest of the summer with some “drift” a few cents up and down, but not nearing the 2013 peak of $3.83 per gallon. He said signs point to a “very comfortable supply,” which should mean stable prices.
John Gilroy with Harney Oil Co. in Coralville, said he doesn’t try to speculate on prices due to the many variables.
The actual prices are based on what the futures market anticipates as the value. The futures values are based on factors that speculators deem important and what is happening in the Middle East are having a drastic effect on the futures market, he said.
“If hedge funds on NYMEX are speculating the price of petroleum is going to go up based on fear or other unknown factors, prices do go up and it becomes self fulfilling,” he said.
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