WASHINGTON -- Gasoline is pushing back against its seasonal downward trend as the sectarian fighting in Iraq and fears over crude supply disruptions in the region heat up oil prices.
Gas prices rose 1.2 cents to hit a national average of $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.
Meanwhile, oil prices on the New York Mercantile Exchange rose $2.49 per barrel. According to a Bloomberg report, this jump in crude prices may push gasoline prices up 10 cents per gallon (CPG) during a part of the year when they normally are falling.
"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 the news agency. "If it weren't for the situation in Iraq, gasoline would be coming down by now. This will probably keep it elevated all summer."
Iraq ranked second to Saudi Arabia last month among members of the Organization of Petroleum Exporting Countries (OPEC) in crude production, the report said, producing 3.3 million barrels a day. The International Energy Agency (IEA) had forecasted Iraq to supply 60% of OPEC's production growth during the remaining part of this decade. Fighting has not yet affected the southern part of the country, which contains three-quarters of its crude output, according to EIA.
The gas price hike could slow if the situation in Iraq stabilizes, said Michael Green, a spokesperson for AAA, although prices should stay at a seasonal high through the summer.
"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," he told Bloomberg.
According to AAA, the national average gas price has fallen an average of 20 cents per gallon in June for the past three years. Then association had projected prices to range between $3.55 and $3.70 per gallon for the summer; because of the jump in crude prices to a nine-month high, it expects gas prices to approach the current 2014 high of $3.70 per gallon over the next few days.
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.
Click here for the full AAA report.
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