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Iraqi violence likely to send retail gas prices up

Motorists should prepare for a 10- to 15-cent increase soon, experts warn

Members of the Iraqi security forces on Monday patrol an area near the borders between Karbala Province and Anbar Province. The United States said it could launch air strikes and act jointly with its arch-enemy Iran to support the Iraqi government, after a rampage by Sunni Islamist insurgents across Iraq that has scrambled alliances in the Middle East. Back home, experts say the violence half a world away could cost motorists at the gas pump. (Reuters)

Members of the Iraqi security forces on Monday patrol an area near the borders between Karbala Province and Anbar Province. The United States said it could launch air strikes and act jointly with its arch-enemy Iran to support the Iraqi government, after a rampage by Sunni Islamist insurgents across Iraq that has scrambled alliances in the Middle East. Back home, experts say the violence half a world away could cost motorists at the gas pump. (Reuters)

UPDATE:

While metro Albany still had the lowest average retail gas price of Georgia's eight metro areas surveyed by the AAA Daily Fuel Gauge Report this morning, it was quite a jump from Monday morning's average.

The Albany average early today was $3.41 per gallon, up an average of 7.4 cents from Monday's $3.336. Numerous retail gas outlets in Albany that had opened Monday at $3.299 closed Monday evening as high as $3.459, an increase of 16 cents.

No other Georgia metro area increased by more than 3 cents per gallon day to day, according to the AAA report.

Georgia's statewide average today increased 1.1 cent to $3.562 from Monday, while the national average, $3.664, was up two-tenths of a cent from Monday.

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ALBANY — While gas prices are continuing to be a bargain Monday in Albany compared to the rest of the country and Georgia, U.S. motorists as a whole may be looking at a sharp uptick at the gas pump soon, experts predict.

According to Mark Jenkins, spokesman for AAA — The Auto Club Group, which daily watches thousands of retail gas markets throughout the United States with its Daily Fuel Gauge Report — violence that erupted in Iraq on Saturday brought an end to a month and a half of daily drops in the average cost of gas in Georgia when crude oil prices jumped.

It likely will mean increased pain at the pump soon.

“Motorists should be ready for gas prices to increase around 5-10 cents,” Jenkins said. “The price hike could continue depending on the duration of this conflict.”

The average cost of a gallon of regular-grade retail gas in the United States this morning was $3.662, up a tenth of a cent from Sunday and just under a penny higher than last week. That average price was about a nickel a gallon over the $3.614 that U.S.motorists were paying at the same point in 2013.

As has been the case for several weeks now, Georgia motorists were below the national mark with an average of $3.551 per gallon Monday morning. That was flat from last Monday, but four tenths of a cent higher than Sunday. A year ago, Georgia drivers were paying $3.468, 8.3 cents per gallon less.

The metro Albany market, meanwhile, continued to lead the state’s eight metro areas surveyed daily by AAA with an average cost of $3.336 per gallon, a decrease of 1.3 cents overnight and more than a nickel — 5.2 cents — cheaper than last week. A number of gas stations in Albany on this morning were showing a price of $3.299, with no loyalty cards or club memberships required.

Albany also was the only Georgia metro area in which the year-to-year average was lower Monday. In June 2013, Albany motorists were paying $3.369, 3.3 cents more per gallon.

Reuters reported that U.S. July crude dropped by a penny from Friday’s settlement to close at $106.90 Monday. Prices had swung by nearly a dollar, ranging from $106.61 to $107.54 during the day.

Surging domestic oil production in the U.S. makes it less vulnerable than other countries to a supply squeeze out of Iraq, experts said. “U.S. crude is going to have a muted response, because we’re more independent than we were in the past,” said Mark Waggoner, president of Excel Futures in Bend, Oregon.

On Friday, crude oil completed its biggest weekly gain since December. The cost for a barrel of oil closed Friday at $106.91 on the NYMEX, $4.25 more than the June 6 settlement of $102.66.

European markets were less fortunate in that respect. Brent crude for August delivery rose by 48 cents to settle Monday at $112.94 a barrel, after touching an intraday high of $113.28. The July contract, which expired on Friday, went off the board at $113.41 per barrel, the highest settlement since September 2013.

Concerns are that the violence in Iraq, the No. 2 crude oil producer in OPEC, will spread to the nation’s oil production area. So far, the conflict has stayed several hundred miles north of where most of Iraq’s oil production is located. On Monday, Iraq doubled its security measures in the oil production area, deploying additional troops.

Militants from the Islamic State of Iraq and the Levant have routed Baghdad’s army and seized the north of the country in the past week, threatening to dismember Iraq and unleash all-out sectarian warfare with no regard for national borders.

Meanwhile, Secretary of State John Kerry said the U.S. is considering airstrikes in support of the Iraqi government and U.S. officials may confer with Iranian officials about the Iraqi situation.

“Kerry’s comments confirmed the notion that plans are being readied to assist the Maliki government to hold Baghdad and the south,” John Kilduff, partner at Again Capital LLC in New York, told Reuters. “Oil prices definitely keyed off Kerry’s remarks.”

The Obama administration said Monday, however, that there would be no coordinated military action with Iran in response to the Iraq rebels.

In addition, AAA officials noted, continued conflict could delay the re-opening of a key pipeline in the region that has been closed since March. Saudi Arabia, the top OPEC producer, could be urged to increase supplies to offset potential shortages and meet growing global demand.

After Albany, the average prices for retail gas in Georgia’s other seven metro areas surveyed by AAA were $3.410, Macon; $3.421, Columbus; $3.467, Valdosta; $3.532, Augusta; $3.564, Savannah; $3.604, Athens, and $3.614, Atlanta.