AAA: Expect to pay more this July Fourth

lmorris@macon.comJune 26, 2014 

Motorists planning to travel during next week’s July Fourth holiday are likely to pay more to fill up with gasoline than they did last year.

Average regular gas prices in the Macon area were $3.46 a gallon Thursday, compared with $3.28 a year ago, according to the AAA Auto Club Group.

Nationally, drivers may be paying the most for gas in six years during the holiday period. The average price this week was $3.70 a gallon -- the highest level for late June since 2008.

Mark Jenkins, senior public relations program coordinator with AAA, said he doesn’t expect much change in Georgia gas prices between now and Independence Day, but he warned there could be some fluctuations.

“Prices have been pretty volatile since the conflict in Iraq, and that’s expected to continue the next several weeks,” he said Thursday.

Fear has gripped oil trading markets, after the Islamic State of Iraq and Syria, known as ISIS, seized the Iraqi city of Mosul on June 10 and Fallujah soon afterward.

On Thursday, the average price for gasoline in Georgia was $3.61 a gallon, Jenkins said. Last year it was $3.34 a gallon on the Fourth of July. That’s a 27-cent jump.

“Before this conflict began, the average was $3.54 (a gallon) throughout the state,” he said. “So (prices) still were expected to be slightly elevated (compared with last year).”

Georgia’s average peak price so far this year was $3.70 on April 30, he said. Macon reached its highest-ever average price of $4.29 per gallon on Sept. 15, 2008.

Summer price drop hasn’t happened so far

Gasoline prices tend to spike around Memorial Day, when increased demand cuts against a limited supply as refiners convert from winter fuels to summer blends. But by the middle of June, prices typically retreat.

This year, they haven’t.

Even though Iraqi crude production apparently hasn’t been hit during the unrest so far, and the U.S. has near-record levels of oil supplies, fears about the Middle East conflict have allowed financial speculators to bid up oil prices.

Speculative trading on the violence in Iraq is keeping oil prices about $4 a barrel higher than they would be otherwise, said Andrew Lipow, president of Houston, Texas-based Lipow Oil Associates consulting firm.

The AAA’s Jenkins said that while the U.S. doesn’t import much petroleum from Iraq, crude oil is bought and sold on a global market.

“So if the price of oil goes up because of something happening on the other side of the globe, we’re still paying for the higher price,” he said. “The refineries have to pay more. They pass that along to retailers, who then pass the higher price along to us.”

Other factors also can cause gas prices to fluctuate.

“Anytime there is the potential for a supply disruption, that can cause the price for oil to go up because speculators are essentially betting on a supply disruption and the potential for that to happen,” Jenkins said. “So if there is a hurricane approaching the Gulf (of Mexico), oftentimes prices for oil will go up before the hurricane even hits the area. People are betting on a shortage.

“A lot of people don’t realize that about two-thirds of the price of gasoline is influenced by the price of oil. Other parts of it are taxes, distribution cost, marketing cost, transportation cost.”

Looking ahead, Jenkins said Thursday “it’s kind of tough to say” what gas prices might be in Georgia later this summer.

“Demand may not be quite as high as last year,” he said. “Supplies right now are at record levels. It really just hinges on what happens in Iraq. I think that’s going to continue to keep prices relatively volatile.”

Information from the McClatchy Washington Bureau was used in this report. To contact writer Linda S. Morris, call 744-4223.

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