Retail gas prices increased throughout last week as tensions with Iran escalated and the country threatened to block the Strait of Hormuz, a major shipping channel for approximately one-fifth of the world's oil supply. The United States and Europe continue to discuss stricter sanctions on Iran to thwart their nuclear program.
At the same time, the U.S. economy continues to show signs of improvement and the positive outlook will likely be a factor to cause oil and gas prices to increase during the week. Oil stockpiles in the U.S. dropped to nearly 323 million barrels in mid-December, the lowest level since Dec. of 2008, according to reports from the Energy Department. The price of a barrel of oil closed Friday at $98.83 on the New York Mercantile Exchange—85 cents less than the week prior.
"We're likely to begin the New Year with a rally of optimism in the oil market as the U.S. economy is forecast to continue to improve, coupled with concerns over Iranian tension and the possibility of a disruption in the country's oil exports," said Jessica Brady, AAA spokesperson, The Auto Club Group. "This means motorists could see pump prices increase throughout the first half of January. If gas prices continue to jump an average of 5 cents a week, the national average could reach $3.40 a gallon by the third week of January."
The national average price of regular unleaded gasoline is $3.27 per gallon, 4 cents more than last week. Florida’s average price of $3.31 rose 6 cents; Tennessee’s average price of $3.12 increased 7 cents from last week. Georgia’s average price of $3.20 reflects a 9-cent increase from last week, respectively.
Current and past gas price averages: National: