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Gas prices continue to rise after U.S. pulls out of Iran deal

Prices at the pump have risen seven cents in seven days

Photo (c) dkhoriaty - Getty Images
That jump in gasoline prices you've noticed in the last week may have more than a little to do with geopolitics.

AAA reports the national average price of regular gasoline is around $2.88 a gallon, up seven cents in the last seven days and 17 cents higher than a month ago.

Gasoline is following crude oil sharply higher, and AAA says part of the reason is the White House decision to withdraw from the Iran deal. That means it is renewing sanctions, which include not buying Iranian oil.

Combination of factors

Oil prices have risen over the late spring as supplies have gotten tighter and demand has increased. With the possibility of Iranian oil being removed from the world's supply, the price of oil shot up last week, and gasoline prices rose along with it.

As a result, AAA says 36 states have seen at least a five cents per gallon rise in the price of fuel.

“The administration’s move, combined with the switchover to summer blend, growing global demand, and shrinking supply, continues to fuel pump prices as we approach the summer driving season,” said Jeanette Casselano, a AAA spokesperson. “AAA predicts that the national average may reach $3 a gallon this summer, especially if crude oil prices continue to increase.”

The price of premium gas, required for most high-performance cars, is already well past $3 a gallon – which is significantly more expensive than diesel fuel.

Sticker shock at the gas pump has been most severe for motorists in Ohio, where the average price shot up by 15 cents a gallon. Drivers in Missouri are paying 12 cents a gallon more, and the average gallon of gas rose by 11 cents a gallon in the last week in Kentucky and Minnesota.

Above $3 in nine states

The AAA analysis shows motorists in 19 states are now paying above the national average for fuel, with nine states seeing average gas prices above the $3 a gallon mark. According to GasBuddy, gas stations in 25 cities are selling gas for 70 cents a gallon more than at this time last year.

Consumers with long memories may not think gasoline is that expensive. In the summer of 2014, the average price rose above $3 a gallon, just before OPEC increased production in an unsuccessful effort to drive U.S. shale producers out of business.

The highest average price for regular gas was $4.11, recorded in July 2008. Analysts think chances of that record being broken anytime soon are slim.

They point out that U.S. oil production capacity is much larger now than a decade ago. Should oil prices start to rise too quickly, U.S. producers will pump more oil.

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