Military strike on Syria? Threat boosts gas prices for Labor Day travel (+video)
A possible military strike on Syria pushed up gasoline prices Thursday by 1.8 cents a gallon, the biggest one-day jump in a month. But they're still 27 cents below the Labor Day price last year and prospects of a delay in a military strike on Syria may keep them from rising much during the big driving holiday.
The average cost of gasoline in the US jumped 1.8 cents per gallon Thursday morning to $3.56 just ahead of Labor Day weekend. That's the biggest daily jump since July 17 and was caused by the threat of a military strike on Syria.
Still, Syrian strife is unlikely to wreak much further havoc on gas prices during the high-traffic holiday weekend. The push from US allies to delay a strike on Syria caused oil price futures to ease on Thursday morning. Gasoline prices are expected to stay in their current range through the holiday, according to a forecast by AAA, the national auto club based in Heathrow, Fla.
Those prices aren't exactly a steal, but motorists are better off than a year ago. In 2012, gas prices averaged $3.83 a gallon, marking the highest average gas price on record for Labor Day. This year is expected to be the fourth-highest on record, according to AAA.
The decline is largely due to supply outstripping demand in the US. New drilling techniques have unleashed a surge in oil production in recent years. Consumers, meanwhile, have curtailed demand due to the weak economy and more efficient cars and appliances.
Refineries have had a smooth summer as well, contributing to price stability, and hurricane season has yet to cause disruptions to Gulf of Mexico operations.
Still, domestic production doesn't wholly insulate the US from what is at its core a global market. Syria isn't itself a major oil producer, but the threat of violence spreading across the Middle East was enough to ripple through commodities markets. US oil prices were down slightly in early trading Thursday after rising as high as $112.24 a barrel Wednesday, the highest since May 2011. Wholesale gas prices rose nearly 2 percent Wednesday to $3.08 a gallon and were down slightly in early trading Thursday.
"Futures prices don’t always translate to prices at the pump," Michael Green, a spokesman for AAA, said in a telephone interview Wednesday, "but it should be something motorists are concerned about given that millions of people will be driving long distances for the holiday this weekend."
The effect of strike on Syria would also have limited impact on the broader economy, unless the conflict should spread to other nations in the Middle East.
"The rise in crude is likely to push up gasoline prices in the near term, but not by enough to affect the broader economy," Chris Lafakis, an economist at Moody's Analytics, wrote in an analysis Wednesday. "Though the rise has been relatively sudden, it has not been sharp enough to damage confidence or derail the stock market, unlike the spike in oil prices that occurred around the Libyan revolution in early 2011."
Even if gas prices do suddenly balloon in the next couple of days, chances are Americans still hit the road. Motorists with Labor Day travel plans tend to still take their trips when gas prices jump in the days leading up to the holiday, according to AAA. But that typically means they end up spending less on other weekend amenities.
"The last thing people want to do is cancel their trips just because gas prices go up," Mr. Green said.