Gasoline prices are inching up on Long Island as the busy July 4 holiday weekend approaches, with regular averaging $4.036 a gallon yesterday -- almost 27 cents higher than a year ago.
So far, though, the surge in prices feared by some from the sectarian fighting in Iraq hasn't materialized because that nation's oil producing infrastructure has been largely untouched, analysts said.
"I think there's been a clear easing of concerns about the interruption of Iraqi crude oil supplies because the controlling Shiite government appears capable of defending the Shiite territories where most of the production is," said Tom Finlon, the director of Energy Analytics Group Ltd., in Jupiter, Florida, a trade adviser to an energy hedge fund.
Barring a major disruption, he thinks gasoline prices could ease a bit in coming weeks.
So does Andy Lipow, president of Houston consulting company Lipow Oil Associates LLC, who said, "Over the next couple of weeks we could see maybe up to a 5 cent [a gallon] decline."
Gasoline prices have been on the rise locally and nationally since February due to a shortage of ethanol, which is added to gasoline, rising demand with warming weather, the switch-over to more expensive summer grade gasoline, and rising oil prices, driven most recently by concerns over Iraq, OPEC's second largest oil supplier after Saudi Arabia.
The Long Island average for regular has climbed by almost 44 cents a gallon since the low of $3.60 a gallon on Feb. 3. The average tipped over $4 gallon on June 21 for the first time since last July 27.
Some analysts, including Finlon and Lipow, have warned of big price increases at the pump if Iraqi oil output is significantly reduced, possibly exceeding the local record of $4.346 a gallon for regular, set in July of 2008. Iraq exports about 2.7 million barrels a day of crude oil, including some to the U.S. and more to Asia and Europe. That represents about 4 percent of the world's daily production.
Crude oil prices have surged since January because of damage to Libya's oil infrastructure by rebels, production cuts in Ukraine due to the conflict there, rising world demand and the prospect of losing Iraqi production. U.S. crude oil, which most U.S. refineries use, has risen from a recent low of $91.36 a barrel on Jan. 9 to as high as $107 in recent weeks. Yesterday, it settled at $104.48 a barrel in futures trading on the New York Mercantile Exchange.
Much of the gasoline used on the East Coast is imported from Europe, where refineries use a more expensive grade of oil, known as Brent. Its price has been rising, too, settling at $111.27 in London yesterday after trading as high as $115.06 in recent weeks.
Analysts attributed the slide back in prices from recent highs to easing of concerns about Iraq and indications that two oil ports closed by rebels a year ago in Libya would soon reopen.