Fear of oil production disruption in Iraq affects summer budgets locally
Written by: Leigh Isaacson, Reporter - bio | email
NEW ORLEANS (WVUE) -
Just a few weeks ago, experts had predicted that fuel prices would remain stable, and even be a few pennies cheaper than last summer, according to Eric Smith, associate director of the Tulane University Energy Institute of the AB Freeman School of Business.
Now, fear of what could happen to oil production as violence grows in Iraq changes that prediction. It's already affecting summer budgets.
Wednesday, Kalbesh Patel replaced the $3.40 sign with $3.53 at his Shell gas station on the corner of Carrollton and Earhart.
"It was about 13 cents difference," said Patel.
The price jump, he said, was out of his control as crude oil prices climbed along with renewed violence in Iraq.
"It all depends on the market. It all depends on the crude oil, as you know," said his partner, Riva Patel.
"The Iraqis have been exporting 3.4 million barrels a day. They could go to two million barrels a day and theoretically we can cover the shortage," said Smith.
Much less, however, and Smith said a shortage would be possible. That fear drove crude oil prices up.
"The actual shipments haven't changed. The supplies haven't changed, but they do realize there's a fairly small about of spare capacity," said Smith.
On top of that, rising prices are market trends in other industries where fuel is a number one cost.
"We've just noticed, prices just keep going up and up," said Amber Mayeur, a travel consultant with Lagniappe Travel Service.
Mayeur said those looking to come to New Orleans for a cruise, or locals trying to escape the heat, should budget a bit more this summer for plane tickets.
"In the past few months, we've seen prices go up internationally and domestically. It ranges from $10 to $100. It just depends on where you're going," said Mayeur.
Prices affect vacationers and regular business travelers.
"Just in two years, the round trip prices have doubled from New Orleans to Houston," said Mayeur. "It went from being about $150, $200 two years ago and now it's $300."
Smith said airlines will likely not feel the crude oil price increases until later if unrest in the Middle East remains because they buy fuel on longer term contracts.
It's at the pump where you'll see the immediate changes.
"Crude oil, every other day. We always look at the market," said Patel.
"What's much more concerning for people in the U.S. is where exactly do you plan to drive to? If you're driving in the Gulf Coast, the energy states, we're going to have the cheapest gasoline in the country," said Smith.