Just in time for the holiday, turmoil in the Middle East is prodding price points higher. “I think the calculus changed when Iraq moved to the front page with the fall of Mosul,” says GasBuddy Chief Oil Analyst, Tom Kloza.
North American oil prices have risen by just a few pennies since the Iraqi violence put a question mark around the future stability of supply.
But Kloza says it’s not going to be as bad as in past years. “Generally, we’re going to be paying anywhere from 5- to 20-cents less,” he says, but “it is actually going to be the highest priced July 4th Holiday since 2008.”
The national average this week is $3.68–20-cents higher than last year. In Houston, the average pump price is $3.49–up 16-cents from last year.
“Even though Iraq contributes less than 3-million barrels of oil a day to OPEC’s production, the whiff of uncertainty is having an effect on oil traders,” says Kloza. “It certainly spooked the sellers, and my hunch is, it spooked them for probably about six or seven weeks,” he says.
Interestingly, Kloza doesn’t think that Iraqi exports–or the lack thereof–are going to have a major impact on the market here.
“The Super-Islamic State does not have really, too much in the way of oil properties, and it’s not critical to oil exports,” Kloza says. The country contributes about 2.6-million barrels a day of crude oil from Iraq, but it all comes from the south, from the Shiite strongholds in Basra, well south of Baghdad. “In the meantime, here in the United States, we’re producing 3-million barrels a day more crude than we were when the first Arab Spring broke out in the Winter of 2011-12,” notes Kloza. “So we’re somewhat of an “Insulation Nation” here,” he says.
Kloza also does not believe the completion–or further delay–of the Keystone XL Pipeline is going to make much difference in the price we pay at the pump anytime soon. “I don’t think we’re going to see any oil pumped on the Keystone before, let’s say, 2016, right now,” he predicts. “It’s still going to come here from Canada; it’s going to come by rail, and it’s going to come very, very quickly,” Kloza says.
“Rail moves much faster, and there’s going to be a lot of dislocations, and be moving one way or another,” he says. “The bottom line is, the Keystone is really not a big deal in terms of oil supply and oil prices; it’s something that has become this political football,” says Kloza. And as such, not a big factor in energy pricing. “Don’t expect it to alter the balance of supply, or to really have much impact on the price we pay for fuel or for Crude Oil right now,” he says.