July Fourth fires up highest gas prices since '08

The recent run-up in gasoline prices will make the Fourth of July weekend the costliest for motorists since 2008.

Prices will average about $3.68 a gallon for regular grade gas, up 17 cents from last year but well below the all-time $4.11 record set just after July 4, 2008.

Rising crude oil prices have been driving an unseasonably early summer run-up on retail gas prices, mostly on continued fears of political unrest in Iraq. Benchmark West Texas crude oil, at $105.74 a barrel Friday, remains stubbornly close to 9-month highs. Brent crude, at $113.31 a barrel, has jumped more than 5% the past two weeks on fears that Iraqi oil exports will be slashed if violence spreads.

Speculators have bet heavily on higher crude prices. Price tracker gasbuddy.com estimates a record $50 billion has been bet on oil futures contracts traded on the New York Mercantile Exchange.

Still, gas prices may be near their 2014 peak. Tom Kloza, senior energy analyst for gasbuddy.com, expects a $3.75 top.

"Demand during the summer looks to be brisk, but it will be hard-pressed to match last year's consumption rate. Year-to-date, U.S. motor fuel demand has averaged about 365 million gallons per day, up about 1.7% from the same period in 2013,'' Kloza says. "But lower demand looms through most of 2014 thanks to less driving by millennials and an increasingly more efficient light-vehicle fleet."

Overall gas prices for the first half of 2014 are expected to average $3.52 a gallon, down 5 cents from the first half of 2013 and 12 cents cheaper than the first six months of 2012, when gasoline averaged $3.64.

Iraqi concerns aside, U.S. gas prices could be roiled by the hurricane season, which can disrupt supplies and refineries in Texas, Louisiana and Mississippi. "The big risk for 2014 gas prices still looms in the form of tropical weather in midsummer,'' Kloza says.

A look at current average U.S. prices vs. year-ago levels:

$3.68 vs. $3.51 (regular grade).

$3.86 vs. $3.70 (mid-grade).

$4.03 vs. $3.86 (premium).

$3.90 vs. $3.83 (diesel).

At $3.38 a gallon, South Carolina is currently the cheapest state for gas. That's nearly a $1 less a gallon than Hawaii, averaging $4.34.