AAA: Iraq uncertainty increasing gas prices

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Military uncertainty in Iraq is resulting in drivers paying higher prices at the pump, according to the AAA Auto Club. 

AAA said this week that the average price of a gallon of gas was $3.66 and counting because of the violence that has erupted in Iraq. 

“After falling for nine straight days, the national average has increased for five consecutive days for a total of about two cents per gallon as violence in Iraq has intensified,” the organization said. 

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AAA said the increases that are likely coming will probably be higher than the normal summer gas price spikes. 

“AAA has predicted that drivers will pay relatively high prices this summer, ranging from $3.55 – $3.70 cent per gallon, however this range may be higher if unrest in Iraq escalates or disrupts oil production in the region,” the agency said. “Given the increase in crude oil prices to nearly a nine-month high, retail gas prices are likely to rise to or near the current 2014 high ($3.70 on April 28) in the coming days.” 

AAA said international conflicts often impact U.S. gas prices. 

“A year ago the national average was turning lower as domestic production and distribution issues eased, although market watchers were keeping a close eye on geopolitical tensions in Syria,” the organization said. “While Syria is not a major oil producing nation, there was concern that fighting might spread to other countries in the region, which kept some upward pressure on crude oil prices.” 

The average price of gas is of interest in Washington of late because a bipartisan pair of senators suggested this week increasing the tax on gas purchases for the first time in more than 20 years to help pay for transportation improvements. 

The gas tax, which is currently priced at 18.4 cents per gallon, has been the traditional source for federal transportation spending. The tax currently only brings in approximately $34 billion, however, and lawmakers are trying to maintain an annual funding level of about $50 billion. 

Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) suggested Wednesday increasing the gas tax by 12 cents over the next two years to help raise approximately $164 billion they said could be use to close the shortfall. 

Corker is one of the first Republican lawmakers to explicitly endorse a gas tax increase this year. 

The current transportation bill is scheduled to expire on Sept. 30. Complicating matters further, the Department of Transportation has said that it will run out of money for its Highway Trust Fund in August if Congress does not act soon. 

AAA said this week that the price of gas will be impacted by factors that are beyond lawmakers’ control for the next couple of days and weeks. 

“Gas prices often decline in June with the national average falling the previous three years at an average of about 20 cents per gallon,” the group said. “The recent turmoil in Iraq is likely to prevent that trend from repeating this year.” 

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