Insurgents fighting for control of Iraq’s largest oil refinery have led to concerns that the supply could be disrupted. As a result, gas prices have spiked at a time when drivers usually enjoy a break at the pumps.
The average price has risen every day for a week and is at the highest for this time of year since 2008. That’s when gas prices hit an all time high, topping $4 a gallon in Colorado.
Professor Ron Rizzuto of the University of Denver’s Daniels College of Business does not believe prices will hit that mark again. He says for now the conflict has yet to reach the majority of Iraq’s oil fields, which means crude oil output has not been impacted. He points out the price increase is speculative based on future worries.
“You’re going to see jitters continue here,” Rizzuto says, “but barring any major invasion of Baghdad or worse, we’re not going to see any significant impact beyond where we’re at today.”
Iraq is OPEC’s second largest exporter, but Rizzuto says Saudi Arabia and Russia can make up for any loss in production. He also pointed out unlike the Gulf War in 1999, the United States has vastly more domestic oil production today.
“From a U.S. standpoint, we’re moving in the direction of some independence and a net producer,” Rizzuto said. “That’s a bit different from what we’ve seen before. We have more cushion.”
An increase of 10 cents in the price of gas costs a typical driver an extra $1.50 to fill up. Over time, that can can cost the economy billions of dollars.