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Thursday May 24th, 2018 5:34PM

Georgia prices remain steady despite oil supply, Iran Nuclear Deal decision

By Alyson Shields Reporter

While prices in Georgia are holding steady, nationally gas prices skyrocketed following the President's decision to leave the Iran Nuclear Deal and the reductions in domestic supply.
 
Georgia prices sit at $2.72, compared to $2.87 nationally. The average price in Georgia is the highest since September 2017.
 
In Hall and surrounding counties, the lowest prices touched $2.65 in Stephens, $2.68 in Gwinnett and Jackson, and $2.70 in Hall and Habersham; the highest average was in White County at $2.76. That's all according to the Triple A Georgia gas prices map. In Georgia, Brunswick had the highest price at $2.80 and the lowest was in Augusta-Aiken at $2.63.
 
"Gas prices are their highest in years, yet that doesn't seem to be slowing motorists down," said Mark Jenkins, spokesman for AAA. "The latest round of figures from the EIA shows that gasoline demand is significantly higher than this time last year. A strong economy is helping to fuel motorists along, as we approach the most traveled Memorial Day in more than a dozen years. Those people affected by the higher prices at the pump, are likely cutting back on other expenses like shopping and dining out."
 
Townsend said prices are up for several reasons: Strong domestic gasoline demand caused reduced supply levels, gas stations are shifting to summer blend gasoline, oil prices are at 4-year highs - which raises the price of producing gasoline - all while global demand is strong and global oil supply is tightening.

U.S. sanctions against Iran could further tighten the oil market, depending on what restrictions are put on Iranian oil exports, Townsend said. The oil market jumped last week following President Trump's decision to withdraw from the Iran Nuclear Deal, and reimpose economic sanctions. Any oil sanctions would not actually kick in for six months, yet oil prices hit new multi-year highs at the mere idea of one of OPEC's largest oil exporters having to reduce the amount of fuel it brings to market. Iran pumps about 4 percent of the world's oil and is capable of exporting 2.2 - 2.7 million barrels per day. The previous round of sanctions cut Iran's output in half. It is unclear how much will be cut this time.

The global oil picture has dramatically changed in the past year. Townsend said when gas prices were below $2 a gallon, oil was in high supply. In fact, there was too much oil, which caused the market to crash in 2014. Unfortunately for motorists, that glut has been drained by a combination of strong global demand and production cuts from Venezuela, and a collection of OPEC and non-OPEC oil producers. The mere talk of forcing Iran to reduce the amount of oil they bring to the table, pushed oil prices above $70 per barrel for the first time since 2014. On Friday, WTI closed at $70.70 per barrel, after rising $2 during the week. An increase of that magnitude normally signals a 5 cent increase at the pump.

And, Triple A reports that in addition to the Iran situation, the latest EIA figures painted a picture of lower fuel supply in the United States, which heaped additional upward pressure on prices at the pump. The weekly report showed a 0.3 percent dip in domestic crude inventories, and a near 1-percent decline in gasoline supplies. Production rates are strong, but so too are U.S. demand and fuel exports. Gas stations are also in a process of transitioning from winter to summer blend gasoline, which is federally mandated to happen by June 1.
 

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