Gas Prices Peak Over Holiday Weekend

At $3.67 as the nationwide average per gallon, gas prices are at the highest they've been on 4th of July since 2008.
4:32 | 07/01/14

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Transcript for Gas Prices Peak Over Holiday Weekend
You lose game Tuesday July 1 the New York financial markets are open at today's big number. Three dollars and 67. Cents and climbing that the average price nationwide for a gallon of gas. And it's the highest it's been on fourth of July since 2008. Hello everyone I'm Michelle Franzen in New York here to explain why were all going to be suffering from pain at the pump. Rick Newman of Yahoo! finance Rick give us an idea of what's behind these high prices it is all is that all the instability in Iraq. Part of. It is anybody who's been paying attention to headlines knows there's it's a new outbreak of what looks like civil war in Iraq. That has not affected oil supplies yet but any instability on that magnitude -- Middle East is. Worry some if that should happen to spread into the south of Iraq it could. Definitely affect oil supplies coming out of country and oil supplies are pretty -- right now. So if if there were a disruption of just a couple of percent that would definitely send prices. Higher so I think we've seen prices go up by somewhere between about seven and eight bucks a barrel. And that's what you call -- this fear premium so that's based on worries about supply disruptions even though we don't really have -- -- of the supply disruptions yet. And this is coming at a time when China is using a lot more oil other developing nations are doing the same. So to story for we've heard before demand for oil remains strong. And there's a limited amount of it to go around so. Normally gas prices peak in spring and drop the bid in June we all know that cycle and what happens here with refineries. Not this year though were close to triple a.'s report peak of three dollars and seventy cents a gallon right. Yeah at this point in the summer we should have been through that Peking we should be seen prices come down by 1015 or twenty cents per gallon it's going the other direction. It's really for the reasons we just mentioned and get -- analysts are saying. We think this is about what we're gonna see this summer if -- prices might take up a little higher from here. Largely because nobody's expecting any kind of quick resolution to these problems in the Middle East it looks like it's only -- again authority here. And Rick we know that a lot of people of course during the summer families hit the road gas costs a lot of people could be dialing back on their summer trips and vacations. It also creates a ripple effect on local economies everywhere explains. -- if you're if you're spending a little bit more on gasoline you're probably still going to take the trip you're not gonna cancel your trip but you might spend a little bit less when you get there. But -- -- a couple other things going on that are worth pointing out -- little the last time. We saw a surge like hissing gas prices was in 2008 they were considerably higher. Six years ago at this point -- summer there around four dollars and ten cents and I was. You remember back that was a panicky situation when gas prices shot up we were not used a four dollar gas that was a real problem. There's a little bit different now a few things have happened since then first of all. Americans are driving a little bit less. Lot of different reasons for that -- and unemployment has something to do it more people are. Moving away from the distant suburbs closer to cities and and more people shop online so fewer trips to the mall and also cars are more efficient now. So we think you're seeing this increase of maybe it just a couple of miles per gallon every model changeover but that's starting to add up so we've got these other. Trends that are happening that are relieving some of the financial pressure even as the price per gallon. Gets hi this summer. So Rick what do you think we'll have to happen here real quickly for these prices to sort of stabilized. -- you know they -- there's a saying in the oil industry that best cure for high oil prices as high oil prices so when when we sort of reach the pain point. We do a lot of things we do things differently we we find ways to cut back. You know I don't think we're anywhere near the sort of emergency level where the government will release oil for village trustees of the petroleum reserve -- that's always an option. And we just find ways to adjust mean another thing that happens is the more. Gasoline and oil prices go up the more incentive there is for car companies come up with new alternatives like hybrids or electric -- Even cars that run on hydrogen now so. If oil prices get higher and they stay there will cause enough -- -- create some. Terrific incentives to find alternatives to oil. We'll keep an eye on those prices -- -- from Yahoo! finance thanks for joining us. Sure thank you of course can keep up with the latest headlines right here on abcnews.com. You've been watching the big number I'm Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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