Iraq Turmoil Drives Gas Prices To Their Highest Since 2008

Summer Gasoline Forecast
Rich Pedroncelli/AP

Violence in Iraq is pushing U.S. gasoline prices higher, depriving drivers of the usual price break between Memorial Day and July Fourth.

The national average price of $3.67 a gallon is the highest price 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 6 years ago. 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 "But you are not going to see any apocalyptic numbers."

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.

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

Even before violence in Iraq broke out, this year's predicted decline was slower than expected because of rising U.S. fuel demand and extensive maintenance at some Gulf Coast refineries that reduced gasoline output.

Then, last week, Iraqi insurgents seized a pair of cities and pledged to attack Baghdad. None of Iraq's oil fields were targeted, most are far away from the fighting, and oil exports have continued to flow. But Iraq is OPEC's second-largest exporter, so worries that oil production might be impacted was enough to send global oil prices higher by 5 percent over the last week.

The average price of gas rose 3 cents a gallon during the past week, and analysts expect more increases over the next couple of weeks.

How the situation in Iraq plays out is impossible to predict, but analysts note that the global market is well-supplied with oil and fuels. Morgan Stanley wrote in a recent report that the potential for a significantly higher sustained oil price was "limited without a major disruption," and that "the conflict will likely be contained primarily North of Baghdad, limiting the impact on oil exports."

But drivers in 15 states are already paying more for gas than they have since March of 2013, according to Kloza. The national average will likely soon surpass this year's high of $3.70 a gallon, set on April 28.

Kloza thinks the national average may get close to last year's high of $3.79 a gallon, but he does not expect to see it reach the highs of 2011 and 2012, when it rose above $3.90 a gallon.

And the chances of the average crossing the $4 mark?

"The [last place] Mets have a better chance of winning the World Series," he said.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

I don't care anymore what the price of gas is. I drive an electric, which costs me $0.25 to drive 20 miles on my daily commute (a comparable gas car would cost $4.00 per day in gas at the present rates). I plug the electric car in at night and I have a full charge every morning. The car has an on-board charger with a 350 mile total range. Had the car 2 1/2 years now and never ran out of charge yet. Cost new - $28k fully loaded, leather interior, etc.

June 20 2014 at 4:55 PM Report abuse +4 rate up rate down Reply

Reduce the demand for Gasoline and Diesel, require all Democrats to use their party mascot for all transportation needs.

June 20 2014 at 1:08 PM Report abuse -3 rate up rate down Reply
1 reply to alfrankenfool's comment

Demand for gasoline and diesel fuel is down 6% since 2006

June 20 2014 at 3:29 PM Report abuse +4 rate up rate down Reply
Yup James

I'm using the Bionic Traders method and cannot say enough good things about this program. I love trading oil, it's way better than stocks if you ask me. Google Bionic Traders to learn more.

June 20 2014 at 1:31 AM Report abuse rate up rate down Reply

I just paid a dime more than I did last week. fuel then was 3.49. thankfully our running has slowed down since mom is no longer going to therapy 3 times a week so now we go to town 18 miles away every couple of weeks. hope it doesn't get too much higher though since every little bit hurts. problem is that we are now exporting oil and gas and importing way less. we should have a glut where the prices are coming down but instead we are supplying most of Europe with fuel.

June 19 2014 at 10:30 PM Report abuse +1 rate up rate down Reply

Blame Obama, Pelosi and Reid for our lousy foreign policy!

June 19 2014 at 5:02 PM Report abuse -2 rate up rate down Reply
1 reply to jdykbpl45's comment

Blame Bush and Cheney when they said the Iraq war was going to be easy and short. I loved how Megyn Kelly ripped into Cheney on fox news. Cheney was so dumb founded when Megyn ripped him apart he accidentlly called Megyn, Reagan........LMFAO !!!!!!!!!

June 19 2014 at 8:46 PM Report abuse +3 rate up rate down Reply
2 replies to teaparty2implode's comment

How is the electroshock therapy treatments going for you ,Dopey DF? I hear they call you crispy critter at the clinic.

June 20 2014 at 7:11 AM Report abuse +4 rate up rate down

They don't allow a satellite dish in Bartholds hillbilly trailer park.

June 20 2014 at 1:11 PM Report abuse -2 rate up rate down
Merrio Fryman

the oil companies are greedy, corrupt, and power hungrey, just like our government
and they will all be that way untill the people go to Washington with
their R-14s and demand the government is for the people and not the greedy
big guy.

June 19 2014 at 4:23 PM Report abuse +3 rate up rate down Reply

This country produces more oil than it's refineries can handle. I'm gonna need a better answer.

June 19 2014 at 4:06 PM Report abuse +3 rate up rate down Reply
1 reply to crrunch's comment

the answer REMAINS the choke hold the ENVIROS HAVE,
the BS acronym AGENCIES,
unconstitUtional CONTROL,
on and on.

June 20 2014 at 10:08 AM Report abuse -3 rate up rate down Reply

when Obama took over WH, the national average gas price was $1.89 gal, and in last 5 years gas price is $3.80's gal, not to mention cost living going up by the day, and home income declining by the day, added to the insults health care cost on increase with less coverage, thanks to this president's FAILED promises.

June 19 2014 at 3:33 PM Report abuse -2 rate up rate down Reply

What a crock of sh**T

June 19 2014 at 3:26 PM Report abuse +4 rate up rate down Reply

Where are the conservative republicans on gas prices. Ive not heard a peep out of any of them. Could it be all their rich friends are making a lot of money and they care nothing for the average joe.

June 19 2014 at 3:23 PM Report abuse +4 rate up rate down Reply
1 reply to webbe60's comment

no webbeeeeeeeee--the envirOmentals are running the show and they work WITH the dims.


June 20 2014 at 10:06 AM Report abuse -4 rate up rate down Reply