c.2013 New York Times News Service
c.2013 New York Times News Service
HOUSTON — With all the saber-rattling surrounding Syria and the spike in oil prices over the last week, gasoline prices rose 2 cents a gallon for a second day in a row Friday as motorists began to fill their tanks for the Labor Day weekend.
But energy experts say a major jump is unlikely for the 29.2 million Americans whom AAA expects to travel 50 miles or more on the road this weekend — up from 28 million last year — despite the summer of unrest across the Middle East and North Africa.
In fact Americans will pay considerably less for gasoline than they did last Labor Day weekend, when refinery shutdowns and Hurricane Isaac, which hit the Gulf of Mexico coast, heightened fears of gasoline shortages.
“Gasoline prices are going to be surprisingly temperate,” said Tom Kloza, chief oil analyst at GasBuddy.com. “In California drivers will be spending 30 to 40 cents less than last Labor Day weekend for a gallon of regular and much of the rest of the country will be between 5 and 15 cents lower than last year.”
According to the AAA daily fuel gauge report, the national average price of a gallon of regular gasoline Friday was just over $3.58, still only 5 cents higher than a week ago and 4 cents cheaper than a month ago. Gasoline prices are just beginning to catch up with the rise in global crude oil prices, which had climbed roughly $6 a barrel in just a few days as the United States and allies prepared to attack Syria in retaliation for what they suspect was a government chemical weapons attack on Syrian civilians.
Oil prices retreated by about $2 a barrel Thursday and slumped a bit more Friday. Experts said prices could easily jump back up after an expected attack on Syria.
Oil experts say gasoline prices could rise as much as 10 cents a gallon over the next week or two, as higher oil prices gradually push up wholesale and retail prices. But few expect a big, lasting jump unless there is a major expansion of conflict across the Middle East that seriously threatens oil production and shipments.
The Energy Information Administration projects that the national average price for a regular gallon of gasoline will be $3.59 during the third quarter and $3.52 for the year, 11 cents below the average 2012 price. It expects an even lower 2014 annual price of $3.37 a gallon.
“Gas prices are probably going to be spiking over the next few days,” said Michael Green, a spokesman for AAA. But he added: “It’s not horrendous. We’re looking at the lowest Labor Day gas prices since 2010.”
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One reason, according to a report by the Energy Department on Wednesday, is a surprise weekly jump of 3 million barrels in national oil inventories. The report also showed a much lower-than-expected drop in inventories of gasoline, which remained particularly well supplied on the heavily populated East Coast. Several East Coast refineries that curtailed operations last week for unplanned maintenance are expected to be back up in the next few days, which should further increase supplies.
Summer driving normally tapers off after the Labor Day weekend, and that should help keep a lid on prices. Demand for gasoline should drop by about 15 million gallons a day in September from August levels, according to government statistics.
Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. U.S. gasoline inventories are up nearly 10 percent from a year ago, while demand is up only about 1 percent.
Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing 2 million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.
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Still, some energy experts are expressing concerns. “This kind of unrest will lead to higher prices in the short term,” Tim Dodson, executive vice president for exploration at Statoil, the Norwegian oil giant, said in an interview this week. “It should be a concern for everyone.”
Oil prices are set globally, and there are several weak links in the global supply chain that could cause prices to spike in the coming weeks.
Over the past month, tankers in Libya have been unable to load crude from three large export terminals because of strikes and other protests as the government continues to fail in its efforts to consolidate power two years after the overthrow of the Moammar Gadhafi government. This week the situation worsened when an armed group blocked a critical pipeline, which shut down several important western oil fields. Oil production has fallen by roughly 1 million barrels, representing a bit over 1 percent of global supplies.
As the Syrian violence has begun to spill over into Iraq, militants have repeatedly sabotaged the critical Kirkuk-Ceyhan pipeline, which transports Iraqi oil to the Mediterranean for shipment to Europe and to a second pipeline for transport to Central Asia.
But so far, the turmoil in Egypt has threatened neither the Suez Canal, through which more than 800,000 barrels of oil move by tanker every day, nor production in the country’s oil fields offshore or in the desert. Syrian oil production, never a major factor on world markets, was reduced to a trickle shortly after the civil war began two years ago and no longer affects prices directly.
Saudi Arabia, by far the most important Middle East producer, has continued its efforts to fill the supply gaps as it has since the Middle East and North African unrest began three years ago. Saudi crude production has increased by roughly 150,000 barrels a day since the Egyptian military overthrew President Mohammed Morsi nearly two months ago.