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Rising Tensions in Syria Inch up Prices

In a change from the precedent set over the past several months, the Obama Administration determined late last week that the Syrian government of Bashar Al-Assad crossed a “red line” by using chemical weapons against opposing rebels. CNN Reports:

Syria has crossed a “red line” with its use of chemical weapons, including the nerve agent sarin gas, against rebels, a move that is prompting the United States to increase the “scale and scope” of its support for the opposition, the White House said Thursday.

The acknowledgment is the first time President Barack Obama’s administration has definitively said what it has long suspected — that President Bashar al-Assad’s forces have used chemical weapons in the ongoing civil war.

“The intelligence community estimates that 100 to 150 people have died from detected chemical weapons attacks in Syria to date; however, casualty data is likely incomplete,” Ben Rhodes, the deputy national security adviser for strategic communications, said in a statement released by the White House.

However, the conflict in Syria continues to be a source of geopolitical tension. Russian President Vladimir Putin responded to the US announcement by warning them not to support the rebels. Again from CNN:

Russian President Vladimir Putin warned the West on Sunday against arming Syrian rebels “who kill their enemies and eat their organs,” referencing a widely circulated video that purports to show a rebel fighter eating the heart of a dead soldier…

“I believe you will not deny that one should hardly back those who kill their enemies and eat their organs. … Do you want to support these people? Do you want to supply arms to these people?” Putin asked, speaking to reporters in London after meeting with British Prime Minister David Cameron.

Already, this is having serious implications for domestic gas prices. Syria’s proximity to nearby centers of oil production – along with its remarkably close ties with the state of Iran – makes it a focal point for potential price disruption. According to Access North GA:

Although Syria is not a major oil-producing country, it does boarder Iran and Iraq which produce about one-fifth of OPEC’s oil output. The value of the dollar fell last week, providing further support for the increase in oil prices…

“Motorists shouldn’t be surprised to see retail gas prices creep higher this week as tensions in the Mideast increase and create concerns of supply disruptions,” said Jessica Brady, AAA spokeswoman, The Auto Club Group. “Although pump prices are higher now than they were this time last year, the Energy Information Administration expects the summer average price for a gallon of regular retail gas to average $3.53, about the same as last year.”

While there are other encouraging signs for US drivers, it is imperative to keep in mind the very real possibility that international conflict could have on prices at the pump.

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