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CNN: Gas Prices Up 10% This Year

11:44 AM, Feb 23, 2012   |    comments
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NEW YORK -- Gas prices are surging, and quickly headed toward $4 a gallon, as growing tensions over Iran sparks a run-up in oil prices.

The national average price for a gallon of gasoline jumped 3.3 cents overnight, to $3.612, according to the motorist group AAA. That's the 16th consecutive increase.

In many locations across the nation, prices are already considerably higher, with many gas stations in New York and California already selling gas for $4 a gallon or more. Hawaii leads the way, with gas prices topping an average $4.247. Overall, prices are up 10% from the start of the year.

Oil prices spiked this week after Iran's oil ministry said that it would stop exporting oil to French and British companies, in reaction to sanctions from the European Union and the United States.

U.S. crude edged up 0.5% to $106.37 a barrel early Thursday, after climbing nearly 7% over the last month.

Brent crude -- Europe's benchmark -- rose 1.3% to $124.48 a barrel. U.S. gasoline prices are closely tied to Brent, with many U.S. refineries using imported oil to produce gas, especially on the East Coast.

Worries about Iran's nuclear plans were heightened after inspectors with the International Atomic Energy Agency were blocked by Iranians from checking out a military base in Parchin. The inspectors have been investigating whether Iran is developing nuclear weapons.

An "ugly situation is inevitable" with Iran, said Peter Beutel of energy risk management firm Cameron Hanover

"The IAEA is leaving empty handed after this two-day impasse," he said. "The feeling is that we've now crossed the Rubicon."

Iran has a civilian nuclear testing program. And Israel could be considering a military attack on Iran over its possible testing of nuclear weapons, though that has not been confirmed.

Iran produces 2.2 million barrels of oil per day. More importantly, the nation's leaders have threatened to block the Strait of Hormuz. One-fifth of the world's oil production, or 17 million barrels, flows through the strait every day.

Manouchehr Takin, senior petroleum analyst at the Center for Global Energy Studies in London, said that Iran is one of many factors influencing oil prices, including signs of resurgence in the U.S. economy, particularly the job market.

"Worry about Iran and the Middle East, turmoil in Nigeria, Sudan and Yemen are thought to have been some of the causes, as well as the perception of improvements in the US economy and the cold weather [in Europe] in previous weeks," said Takin.

CNN

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