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July 4 Holiday Prices Gas Expected To Reach Highest Point Since '08

Jun 30 2014, 5:40pm CDT | by , in News | Latest Business News

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July 4 Holiday Prices Gas Expected To Reach Highest Point Since '08
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AAA's released their latest fuel report, and Iraq's unrest leads price jump.

AAA released the monthly gas report today and warns to expect “high gas prices heading into July 4 holiday.”

The good news is that rates remained low and flat in the past week. The national average price didn’t move from $3.68. Unfortunately, there are more problems on the horizon as unrest heats up in the Middle East.

And the increase of numbers are significant since the previous three Junes saw a price decline of 21 cents per gallon. Part of the normally lower price is because gas "refineries complete maintenance and increase gasoline production in anticipation of the summer driving season." 

In fact, AAA predicts the 34.8 million Americans will not stop traveling at least 50 miles by car since July the Fourth is often a long weekend for many employees. 

While the organization doesn't think the price difference will effect gas usage, "cutting back on dining, shopping" may happen to balance vacation budgets. Since America’s dependence on vehicle gas will guarantee high usage, the increase will affect local business profits instead of gas distributors.

Don’t expect a decline in prices, either. “AAA expects the national average price of gas in July will range from $3.60-$3.70 per gallon, though prices could climb higher if there are new developments in Iraq or a major hurricane.” 

While countries often produce their own gasoline, the Middle East is where many obtain the raw material needed. One hiccup is the fact “Iraq is the second largest oil producer in OPEC, and any decline in exports could impact global oil supplies.”

The biggest potential for falling prices involves stabilizing Iraq and the Islamic State of Iraq and the Levant’s (ISIS, ISIL) impact on the region. When insurgents invaded Mosul, Iraq on June 10, concerns over southern oil production disruption helped to stoke fears and raise crude oil prices. 

While current prices are dependent on ISIL’s actions, the only way to really reach a sky high like 2008’s national average of $4.11 a gallon would be an attack on southern Iraq or a Katrina-level hurricane.  

Avery Ash, AAA spokesman, agrees political snafus will cause drivers to pay "about 15-20 cents more per gallon than expected heading into the busy Independence Day weekend due to market fear about Iraq." Whenever terrorist invasions or natural disasters occur, oil prices tend to spike. They also tend to fall as government agencies make definitive action.

In a country with many people saving all year for one vacation, the inflated costs won't make citizens feel particularly sensitive to political opposition and foreign policy. Ash agrees consumers feel frustration as oversea events outside their control "make it more expensive to celebrate Fourth of July here at home." 

So if you’re planning a trip, check travel costs and put in a little padding for just in case. That extra .15-20 per gallon adds up quickly if vacationing farther from home.



Source: AAA

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