NEW YORK (MainStreet) — Travelers who are planning to drive out of town this weekend to commemorate Labor Day weekend are likely to see gas prices spike with mounting tensions in Syria rising and global demand picking up.
The markets have reacted to the potential conflict in Syria, sending wholesale gasoline prices to a six-week high on August 27.
"I would expect gasoline prices to go up this weekend from current levels," said Brian Youngberg, a senior energy analyst at Edward Jones in St. Louis. "Higher oil prices and wholesale gasoline prices will likely be passed onto consumers quickly.
Also see: These Colleges Would Get High Honors on Obama Ranking >>
Industry experts said retailers will take advantage of the opportunity to raise prices at the pump.
"Gasoline prices are set locally by the station owner and they will look for an opportunity to raise them if they can," he said. "Higher oil prices typically provide an opportunity for the retailer."
AAA and IHS expect that 34.1 million Americans will take trips of at least 50 miles away from home this weekend, and 4.2% more drivers are expected to hit the road compared to 2012.
Global oil prices are often affected by geo-political events, and fear of a disruption in supply and production can push up wholesale and retail prices temporarily.
Oil prices in the past tended to decline during Labor Day weekend, because refiners began to switch to their winter blend, which is less costly to produce than summer blends. Gasoline blends refined in the summer are required by the EPA to be a more stringent form of gasoline so that the blend is less volatile and less likely to vaporize in the atmosphere because of warm weather, said Ryan Mossman, vice president and general manager of fuel services of Fuelquest, a Houston-based software company that manages supply chain for suppliers and purchasers of fuel such as FedEx and UPS.
Also see: The Big 'O' and Your Finances >>
Gasoline prices for the weekend could reach $3.63 per gallon on average, depending on the region. Last week gasoline prices averaged $3.55 and reached highs of $3.68 during the middle of July, he said.
Prices could also continue to rise because of the threat of military actions in Syria and the potential for hurricanes and tropical storms increasing, Mossman said.
"The prices will likely stay up, depending on responses to Syria," he said. "If there isn't action, prices will drift back down. In general, I think it is safe to say that prices will stay at $3.63 and trickle down, since there is not a lot of pressure for prices to go up."
Gasoline prices will likely fall right before Labor Day weekend, because there is too much supply in the market, said Chris Faulkner, CEO of Breitling Energy Companies, a Dallas oil and gas exploration and production company.
"Considering that oil has risen to two-year highs and surpassed $110 a barrel before the Labor Day weekend, my predictions on gasoline prices may surprise people," he said. "The average price for a gallon of gasoline slipped in the last two weeks, losing almost four cents due to abundant supplies in the market. Gas was costing folks $3.56 a gallon, which is 20 cents lower than the holiday weekend a year ago."
Gasoline prices are down, because "U.S. refiners kept production capacity high running at 92% of the maximum over the last 45 days," Faulkner said. "There's ample supply of gasoline in the market and that is a good thing for consumers hitting the open roads for the last true weekend of summer."
If stability in the Middle East is tested, then consumers will see gasoline reach $5 a gallon soon, he said.
"While Syria may not be a major oil producer nor an exporter, without question, Syria is a small, delicate pin in the world's major oil grenade and it could blow up in the United States' face if we are not very careful here," Faulkner said.
And that could be enough to tip the scales and nail consumers at the pump.Oil has reached an 18 month high or near $110 a barrel on just talks of a strike on Syria. When the missiles take off, oil will test or surpass $125 a barrel, and if China or Iran blink - both have interests in Syria - oil will break the all-time record from 2008 at $147 a barrel, according to Faulkner.
"Combine that with limited supply from the summer to winter blend switch over that is taking place in the next few weeks, and we could be in for an economic panic here in the United States," he said.
--Written by Ellen Chang for MainStreet