Iraq Violence Sends Gas Prices Slightly Higher

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VIRGINIA BEACH, Va., (June 17, 2014) - AAA has predicted that drivers will pay relatively high prices this summer, ranging from $3.55 - $3.70 cent per gallon, however this range may be higher if unrest in Iraq escalates or disrupts oil production in the region. Given the increase in crude oil prices to nearly a nine-month high, retail gas prices are likely to rise to or near the current 2014 high ($3.70 on April 28) in the coming days. Currently, the national price for regular unleaded gas is $3.66 which is just five cents higher than a year ago, one cent higher than a month ago and one cent higher than a week ago.

In Virginia, the average price for regular unleaded fuel is $3.46. This is six cents higher than a year ago, but the same price a month ago and only one cent more than a week ago. The current Hampton Roads average on unleaded gas is $3.55 which is 15 cents higher than a year ago, but four cents higher a month ago and only three cents lower than a week ago.  

In the past, gas prices have often declined in June with the national average falling the past three years at an average of about 20 cents per gallon. The recent turmoil in Iraq is likely to prevent that trend from repeating this year. A year ago the national average was turning lower as domestic production and distribution issues eased, although market watchers were keeping a close eye on geopolitical tensions in Syria. While Syria is not a major oil producing nation, there was concern that fighting might spread to other countries in the region, which kept some upward pressure on crude oil prices.

Much of the attention of global market watchers has shifted from Ukraine and Russia, to widespread violence in Iraq.  According to the EIA, Iraq has the fifth largest proven oil reserve in the world and is the second largest producer of crude oil in the Organization of the Petroleum Exporting Countries. Markets will continue to monitor the conflict closely due to the potential for violence to spread to neighboring oil producing nations, and the overarching regional foreign policy implications associated with an Iraqi civil war.

As part of North America’s largest motoring and leisure travel organization, AAA Tidewater Virginia provides its more than 325,000 members with travel, insurance, financial and automotive-related services. Since its founding AAA Tidewater Virginia has been a leader and advocate for the safety and security of all travelers.  For more information, visit AAA.com and follow us on Twitter at Twitter.com/AAATidewaterVA.