(USA TODAY) - That September drop you were expecting for gasoline prices? Don't hold your breath.
Currently, gasoline averages $3.55 a gallon nationally, down from $3.63 a month ago. Most analysts expected a drop to about $3.40 by early fall, as seasonal demand slumps after the summer driving season. Now, some forecasters predict a short-term spike of up to 10 cents a gallon.
Crude oil prices and gas futures rallied sharply Tuesday on fears that U.S. military intervention in Syria's civil war would disrupt Middle East supplies.
Benchmark Brent crude surged 3.3% to a six-month high of $114.35 a barrel Tuesday and was trading at $115.65 early Wednesday, while West Texas Intermediate was trading above $110 a barrel. September gasoline futures climbed 1% to $3.06 a gallon. Typically, wholesale prices are 60 to 75 cents below what consumers pay at the pump.
"In some portion of the country, those increases are translating into a a few bumps higher, and in other areas, the slow drift to lower (pump prices) has been put in limbo,'' says Tom Kloza, chief oil analyst for price tracker gasbuddy.com.
"Bottom line, we'll be paying perhaps in the low $3.60s this weekend, and God willing, the last 120 days of the year should see prices at or below those levels, once crude calms down and sellers return to the global crude market,'' Kloza says.
Syria isn't a major oil producer - its output is less than 100,000 barrels a day vs. about 400,000 before its civil war started two years ago. But oil prices have been rising since July, when tensions in Egypt began raising concerns over supply through the Suez Canal.
The region was already under pressure before Syria's uncertainty caused crude to spike. Civil unrest in Iraq is rising again - more than 1,000 Iraqis were killed in July, the highest monthly death toll since 2008. And Libya's oil production is already down sharply due to worker strikes over pay. Libya's deputy oil minister says protests by security guards have slashed oil exports to just 300,000 barrels a day vs. 1.6 million barrels prior to the 2011 war that toppled dictator Moammar Gadhafi.
Some industry observers, such as Societe General, suggest rising tensions could cause crude oil to briefly spike to $150 a barrel if the Syrian conflict spills over to major oil producers and causes larger supply disruptions. Crude oil last approached those levels in July 2008.
Kloza, however, doesn't see $150 a barrel oil, given weakening U.S. demand and falling prices of ethanol, which makes up 10% of most domestic motor fuels.
"Under most scenarios - but perhaps not the scenarios proffered by banks or hedge funds with plenty to gain from oil price escalation - I believe $115-$120 a barrel is probably a ceiling for this crude oil rally,'' Kloza says. "But until we have the (Syrian) attacks, and more importantly, the reactions, pricing points for crude are an intellectual abstraction."