Spike in gas prices due to violence in Iraq

WEST LAFAYETTE, Ind. (WLFI) — Drivers in Greater Lafayette may have noticed a jump in gas prices Friday. One Purdue expert said it’s all due to what’s happening in the Middle East.

According to GasBuddy, some stations in the Lafayette area have jumped more than twenty cents a gallon Friday. It’s causing people to line up and fill their tanks before it gets even more expensive.

Drivers, like Mason Gray, rushed to the nearest pump to fill up before a predicted spike in gas prices. He said he heard prices were going up and actually waited in line to get the cheapest price per gallon.

“My truck isn’t really good on gas, so I’m not liking that it’s going up,” Gray said. “I’m here to fill up today while it’s down.”

But Purdue economist Wally Tyner said, the sudden spike in price is due to the market preparing for something that may not happen.

“Everybody’s acting in advance of the shortage actually occurring, and sometimes it materializes and sometimes it doesn’t,” Tyner explained.

According to Tyner, insurgents in Iraq have taken control of oil producing regions threatening the availability of oil. Due to the threat that supplies will be tighter, the cost of gas has risen.

“Increased availability of oil from Iraq is threatened now, and that means supplies are going to be much tighter, and that means prices are going to go up,” Tyner said.

Unless the insurgents are pushed back from the oil producing regions, Tyner said gas will stay at a higher price.

“There is at least the possibility that they will slow it down or shut it down,” Tyner said. “If they do, then that’s going to take quite a bit of oil off the market — enough to keep oil prices higher.”

However, there are other options for oil. Tyner said Saudi Arabia could increase production in order to stabilize the market and lower gas prices in the U.S.

However, Tyner said the price per gallon ultimately depends on what is happening politically in the region.

“We could see weeks or months of higher prices until this thing get’s resolved, or the insurgents get pushed back and they don’t gain control of the oil producing region,” said Tyner. “Then it could blow over and be done in a few weeks.”

Until then, Gray said he will keep waiting in line to get the best price per gallon.

“I used to think, ‘Why wait?’ Now, that I have to pay for it — it’s for waiting,” said Gray.

Once again, Tyner said the sudden spike is just the market preparing for what could happen and doesn’t necessarily mean gas prices will be this high for long.

To find out where you can find the lowest gas prices in town, click here.

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