A day after America bombed three Middle East nuclear facilities, petroleum analysts said Sunday that they expect oil and gasoline prices to rise, but by how much, just a week before the Independence Day travel period, mostly depends on Iran’s response.
“Drivers across Michigan are seeing the highest gas prices so far this year,” Adrienne Woodland, spokeswoman for AAA, said. “Pump prices will likely face upward pressure if crude oil prices continue to rise.”
Iran has vowed retaliation, with Iranian state media reporting that Iran’s parliament has endorsed a measure to close the Strait of Hormuz, which, if it that happens, could send oil — and gas — prices soaring.
Sunday, the nationwide average for regular unleaded gasoline was $3.22 a gallon, up 8 cents from a week ago, according to AAA. In Michigan, it was $3.29, up 20 cents from a week ago, but still less than the $3.52 a gallon that gas was averaging a year ago.
Communities throughout the state with the highest average gas prices included Ann Arbor, at $3.33 a gallon; Grand Rapids, $3.30, and metro Detroit, $2.29; the lowest, Marquette, $3.03. Others were Traverse City, $3.21, and Benton Harbor, $3.23.
But assuming Middle East oil continues to flow, Patrick De Haan, the head of petroleum analysis at Gas Buddy, challenged gas price doomsayers on social media, predicting that prices would go up, but not surge and likely would remain below $4 a gallon.
In another post, De Haan noted that “all eyes” are on Iran’s response.
The Strait of Hormuz, between Iran and Oman, is an important oil chokepoint with about a fifth of the global petroleum consumption running through it. The U.S. Energy Information Administration has warned shutting it, even briefly, could increase world energy prices.
Some question whether Iran is in a position to carry out its threats.
Maersk, a Danish shipping company, said Sunday its vessels will continue to sail through the strait. The company added it will “monitor the security risk to our specific vessels” and is “ready to re-evaluate this based on information available.”
But Bloomberg News reported two supertankers, each capable of shipping about 2 million barrels of crude oil, have turned around as a result of concerns Iran could close the passage.
Last week, as Trump weighed U.S. strikes, gas prices were on the rise with U.S. oil prices hovering near a five-month high, which pushed gas prices up. West Texas Intermediate, a grade of crude oil, shot up more than 20%, to about $75 a barrel.
Just days ahead of the strike, U.S. Oil & Gas Association President Tim Stewart predicted to Fox News gasoline prices could increase by Independence Day up by 20 or 30 cents a gallon.
Meanwhile, there’s also increased holiday travel, which also could increase prices.
AAA is forecasting more than 72.2 million Americans to travel domestically, between next Saturday and the Sunday after the Fourth of July, an increase of 1.7 million, about 3%, more travelers than last year, and 7 million more than in 2019, before the pandemic.
Of those, more than 2.6 million are expected to be from Michigan.
“Independence Day is one of the most popular times for travel, with Americans eager to take advantage of summer vacation opportunities,” Debbie Haas, vice president of AAA Travel said. “This year, we’re seeing strong demand for road trips, flights, and cruises, especially with the holiday falling on a Friday.”
Contact Frank Witsil: 313-222-5022 or fwitsil@freepress.com.
This article originally appeared on Detroit Free Press: Middle East conflict pushes Michigan gas to highest prices this year
Reporting by Frank Witsil, Detroit Free Press / Detroit Free Press
USA TODAY Network via Reuters Connect
