USA TODAY International Edition
Gas prices offer a Fourth of July surprise 1. Iran
Geopolitics, giddy US drivers among reasons for uptick
Your summer road trip won’t be quite as cheap as you expected.
As Independence Day approaches, gas prices are rising. It’s an unexpected reversal for the fuel, whose cost was expected to steadily decline after peaking at $2.89 in early May.
The average national price of gasoline stood at $2.73 a gallon Tuesday, up 6 cents from a week earlier, according to AAA.
Prices jumped at least a nickel in nearly 25 states in the final week of June. The nation’s high on Tuesday was California at $3.77, while the low was Mississippi at $2.34.
To be sure, the national average price is still far below its historic high of $4.11 on July 17, 2008.
The national average “may touch $2.80” in the coming days, predicted Patrick DeHaan, head of petroleum analysis at fuel-savings app GasBuddy.
Several factors appear to be driving prices up at a time when they’re usually steady or declining:
“Things were looking good, and then Iran happened and the decline slammed on the brakes and oil prices started to go the opposite direction,” DeHaan said.
Iran’s attacks on two oil tankers and the downing of a U.S. drone gave rise to concerns that the flow of oil in the region could be restricted, particularly in See GAS PRICES, Page 6A
the Strait of Hormuz, which handles about 20% of the world’s oil supply.
Iran and the U.S. have been sparring over a nuclear deal that President Donald Trump has assailed as insufficient.
“The concern is maybe they go off the deep end and start more provocations with oil tankers or even with countries themselves,” DeHaan said.
2. OPEC cuts
The Organization of the Petroleum Exporting Countries, a cartel that coordinates actions to influence the market for oil, on Monday extended oilproduction cuts that have been aimed at propping up prices.
With fewer oil supplies reaching the market, prices are naturally facing upward pressure.
3. U.S.-China trade talks
Chinese and American officials signaled in recent days that they have made progress in their efforts to resolve a trade war that dates back to the start of the Trump administration.
That could provide a boost to the economies of both countries, which would increase demand for oil and thus jolt prices, according to JBC Energy analysts.
4. American drivers
Quite simply, Americans are stoked about driving for the Fourth of July.
AAA projected that the number of Americans traveling for the holiday would reach an all-time high of nearly 49 million.
That translates into increased demand for gasoline and thus higher prices.
Last month, U.S. oil stocks hit a four-year low for the month of June, according to the Energy Information Administration.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.