Turmoil in Iraq pushes up U.S. gasoline prices

Wire and staff reportsJune 22, 2014 

Violence in Iraq is helping to make gasoline in the U.S. more expensive, depriving drivers of the usual price break between Memorial Day and the Fourth of July.

Global oil prices have risen 5% since an insurgency took over two Iraqi cities. Any sustained increase in oil and gasoline prices can dampen economic growth.

In the U.S., the average price of $3.68 per gallon is the highest for this time of year since 2008, the year gasoline hit its all-time high. The good news is that gasoline is not likely to spike above $4 as it did six years ago, experts say. Or even cross $3.90, as in 2011 and 2012.

"You are going to pay a little more than we thought you were going to pay," says Tom Kloza, chief oil analyst at the Oil Price Information Service and GasBuddy.com. "But you are not going to see any apocalyptic numbers."

Oil price hikes have not yet had a major effect on the cost of gasoline that drivers pay in the central San Joaquin Valley.

The average price for a gallon of unleaded gasoline in Fresno on Thursday edged up one cent over the last week to $4.06, according to AAA of Northern California.

Gasoline prices in the Visalia-Tulare-Porterville still are continuing their fall from Memorial Day, dropping one cent in the last week to $4.04.

Statewide, prices are holding steady at $4.10.

Gasoline prices typically fall in the weeks following Memorial Day, after supplies increase enough to fill up the cars of the nation's vacationers as summer approaches. Prices have declined during the previous three Junes, by an average of 21 cents per gallon, according to AAA.

This year, drivers are paying more. The average has risen every day for a week, and now is higher than it was on Memorial Day — with more increases sure to come.

Higher fuel costs can reduce economic growth — in the U.S. and around the world — because they raise costs for businesses and leave drivers with less money to spend on other things.

In the U.S., a 10-cent rise in the price of gasoline only costs a typical driver an extra $1.50 to fill up a tank, but if that rise is sustained over a year it costs the U.S. economy $13.5 billion.

The average gasoline price so far this year, however, is still 5 cents cheaper than it was last year over the same period.

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