Motorists in the U.S. may pay the most for gasoline in six years over the July 4 Independence Day holiday as the escalating conflict in Iraq pushes oil prices higher during the peak driving season.
Retail gasoline averaged $3.704 a gallon yesterday, up 1.8 cents from a week earlier and the highest level for late June since 2008, the U.S. Energy Information Administration reported. Brent crude futures, the price basis for imports of crude and gasoline, jumped $5.29 a barrel this month as energy companies including Exxon Mobil Corp. and BP Plc evacuated workers from Iraq because of the worsening violence in OPEC’s second-largest oil producer.
“There’s a fear that the rebels will take Baghdad or the oil-producing regions, and that’s driving up the cost of oil and making it more expensive to produce gasoline,” Michael Green, a Washington D.C.-based spokesman for the AAA motoring organization, said by phone yesterday. “There’s a good chance that drivers will pay the most expensive price for July 4 in six years, based on what we’re seeing now.”
The U.S. imported 766,000 barrels a day of gasoline in the week ended June 13, up from 556,000 a year earlier. Gasoline futures are up 17.59 cents a gallon on the New York Mercantile Exchange this month, reaching a nine-month high of $3.1277 June 20. The August contract gained 1.82 cents to $3.1258 today.
Militants from the Islamic State in Iraq and the Levant have been battling Iraqi forces for almost two weeks over the country’s largest refinery, the 310,000-barrel-a-day plant in Baiji.
Iraq’s crisis flared when ISIL militants this month captured Mosul, the country’s biggest northern city, and advanced to towns just north of Baghdad. Iraq pumped 3.3 million barrels of oil a day last month, data compiled by Bloomberg show, second only to Saudi Arabia in the 12-member Organization of Petroleum Exporting Countries. Production remains unaffected in the southern part of the country, where about 85 percent of output is located.
Pump prices advanced in every region of the U.S. except for the Midwest, where they fell 2.1 cents. The biggest gain was in the Rocky Mountain area, where fuel costs rose 7.6 cents to $3.606 a gallon, the EIA report showed.
The EIA collects information from about 800 filling stations as of 8 a.m. local time on Mondays.
Prices have risen 1.4 cents in June, after falling an average of 21 cents for the month the previous three years, according to data from Heathrow, Florida-based AAA.
“We thought prices would fall 10 to 15 cents in June, so from that point of view the net effect is significant,” Green said.