Declines in gasoline prices over the past few weeks ended over the weekend, thanks to the violence in Iraq, the second largest crude producer in the Organization of the Petroleum Exporting Countries, or OPEC.
While gas prices are likely to climb in the short term at least, experts say a major disruption in global oil supplies is unlikely so long as the crisis does not escalate. They contend that this is not a repeat of the 1973 OPEC oil embargo, prompted by that year’s Arab-Israeli War. Nor is it another oil crisis as the world saw in 1979, which was spurred by the Shah of Iran’s ouster.
“The good news is that the United States, here domestically, we’ve stepped up our crude oil production and our imports, coming from the Western Hemisphere primarily,” said Mark Jenkins at AAA South in Tampa. “Only about 29% of our crude oil and petroleum imports come from the Persian Gulf.”
Jenkins says the average price for gas fell for 51 straight days in Florida before the conflict in Iraq erupted. AAA reports self-serve regular averages $3.57 per gallon in the Sunshine State. In Pensacola, it’s $3.63 – up eight cents a gallon from last week.
The cost for a barrel of oil closed last Friday at $106.91 – $4.25 more than last week. So far, there’s been no disruption of Iraq’s oil production – but Jenkins says there are some brittle nerves in the market.
“A lot of the fighting has been up in the northern region of Iraq,” Jenkins said. “The concern is that that violence could spread to the southern region, where a lot of the oil is being produced and shipped out. If that does happen, that will be a major issue. But right now, just the mere concern that there could be a supply disruption causes the price of oil to spike.”
And that in turn could translate to an extra nickel or dime per gallon at the pump, during the summer driving season – when gas prices already tend to rise because of growing demand.
An extended struggle in Iraq could delay the re-opening of a key pipeline in the region which has been closed since March. Jenkins says other oil-producing nations – Saudi Arabia in particular -- could be asked to take up any slack.
Neither AAA nor the International Energy Agency expects prices to approach the $4 per gallon mark. And there’s plenty of gas out there. But Mark Jenkins at the auto club does have a message for summer travelers.
“Keep an eye on the pumps, competitive shopping certainly can help,” he said. “And then just drive smart. The faster you drive is just going to worsen your miles per gallon, and the more weight in your vehicle is going to decrease your miles per gallon.”
Other such tips can be found at AAA.com.