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 4 gasoline prices in six years, GasBuddy has predicted.
“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.
U.S. oil production is as high as it has been since October 1986 and gasoline should be well supplied in all states during the holidays, “but big sellers will probably stay on the sidelines until it’s clear that Middle East exports aren’t threatened,” Kloza said.
The U.S. is nowhere near as dependent on Middle Eastern oil as it was as recently as three years ago, but the global market could be nervous about Iraq from now through the peak weeks of the Atlantic Hurricane season, GasBuddy analysts suggest.
The potential loss of all or a 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.
Though Iraq is a very serious international problem, the U.S. crude oil prices are only 75cents to $1.50 higher per barrel than they stood before the fall of Mosul on June 10, 2014. World crude oil blends are up by about $3.25 per barrel over the same period.
Despite much ado about higher prices of late, the average U.S. gas price for the first half of 2014 will be the cheapest number in the last four years. GasBuddy sees a $3.52 per gallon January-through-June average this year compared to $3.57 last year; $3.64 in 2012; and $3.53 in 2011. (In 2010, the first half of the year produced an average price of $2.76, but that occurred as the U.S. was recovering from the worst recession of the automobile age.)
“Hot spots” with expensive gasoline show up most frequently in California and Washington, but also in Michigan, Ohio, and especially Kentucky. In all cases, the higher numbers are not attributable to Iraq, but instead are tied to regional refinery issues.
Southern California, the Puget Sound, and portions of Ohio and Kentucky have all seen unanticipated refinery downtime in recent weeks. Kentucky finds average gas prices more than 30 cents per gallon above last year.
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