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Higher oil prices are pushing up pump prices

It's easy to blame Egyptian turmoil for the increases, but one energy analyst says domestic demand is growing rapidly, too.

By Charley Blaine Jul 10, 2013 3:26PM
Gas station © Purestock/Purestock/Getty ImagesOil prices have been rising since political turmoil erupted in Egypt, and now it's starting to hit your pocketbook and will for a while.

The national average price of gasoline was $3.501 a gallon on Wednesday, AAA's Daily Fuel Gauge Report showed. That was up from $3.483 on Tuesday and $3.474 on Monday. The gains are the first since prices hit a near-term high of $3.66 on May 22.

The increases shouldn't surprise. Brent crude is up 5.3% since May 31 to $108.25 a barrel. Brent is the benchmark North Sea crude that heavily influences U.S. pump prices.

Light sweet crude
(-CL), produced in the United States, is up more than 15% since May 31. It was settled at $106.52 a barrel on Wednesday, up $2.99 from Tuesday. 

Many oil analysts have been expecting rising crude oil prices to push pump prices higher since unrest in Egypt caused the army to remove Egyptian President Mohamed Morsi. The turmoil has continued since, with some 50 Morsi supporters killed on Monday in demonstrations against the military.

But it took a while for rising crude prices to move because domestic supplies were plentiful until recently. Gasoline prices are still below $4 a gallon in most U.S. markets. Prices are average $4.042 a gallon in Alaska and $4.307 in Hawaii.

Egypt isn't the only force at work, said Stephen Schork, editor of The Schork Report, an energy industry newsletter.

There's been huge demand for crude oil from refiners as domestic demand has surged, Schork said Wednesday. Some 20 million barrel of crude were drawn down from domestic storage in the last two weeks, the most since the Energy Department began tracking supplies in 1983. Daily gasoline production at refineries has increased by some 2.1 million barrels in the last three-and-a-half months.

Some of the demand may be coming from refiners, Schork said. BP (BP) is reopening an Illinois refinery after doing some upgrade work.

Add to those forces the psychological pressure Egypt is exerting on energy markets. And don't forget heavy buying by speculators.

Will pump prices uniformly rise above $4? Probably not, Schork said. The summer driving season, which increases demand for more expensively refined gasoline, will end in less than two months. Then, refiners can blend in cheaper gasoline.

But here's the good news: He does think that energy markets are in a bit of a bubble. As a result, he doesn't see the price run-up lasting for very long. If pump prices rise too far and too fast, consumers will curtail their driving.

"This thing will flame out," he said.

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132Comments
Jul 10, 2013 4:40PM
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The article says: "Add to those forces the psychological pressure Egypt is exerting on energy markets. And don't forget heavy buying by speculators."

So, fear and greed are causing the price to go up.  No one is having trouble buying crude, yet market factors mean that speculators make billions while we all pay about a dollar per gallon more because of capitalistic system makes billionaires out of speculators who drive the price up and leave American citizens holding the bag. 

We pay more so speculators can get rich.  Its not supply, its not demand, its market manipulation!
Jul 10, 2013 4:33PM
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It amazes me that any little shift in something can raise prices over night, but let that same shift go the other way, it takes weeks to show up
Jul 10, 2013 4:02PM
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Blah, Blah, Blah........ same ole bull cookies to justify filling big oil pockets. Egypt??? Really??
Jul 10, 2013 4:45PM
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This as usual is simply amazing.  Wall Street will look for any excuse to jack up the price to line their pockets.  This whole thing with Egypt & "fears" is pure BULL$HIT.  We have enough of our own OIL here in this country & of course we export it out.  Meanwhile, Washington should regulate these "fears" & "concerns" and unless an all out War or something disrupts the "supply" then NO INCREASE should be allowed because of the Bozo's on Wall Street speculating. Come on already!!!
Jul 10, 2013 5:04PM
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Why are there NEVER any news stories anymore about how this is hurting the average American family?  Because of high gas prices, families have less disposable income to spend on goods and services, and this continues to effect the economy.  Why can't gas prices be the same as when BO took office in 2008 - $1.80 per gallon?   Or even under $3.00 per gallon?  

Before 2008, there were plenty of news stories about how the working public was feeling the pain of higher gas prices, and now NOTHING.  It's like these ridiculous prices have become the new norm, and this isn't right.
Jul 10, 2013 4:34PM
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The Oil Game,

This 'petroleum game' has been going on since the days of Standard Oil in the late 19th century.With such a vice-like lock on this commodity it is no wonder that Big Oil and their speculator vermin are making absolutely obscene profits by using any and all contrivances and 'excuses' to continually rape the American motoring public. The oil barons of the 21st century have obviously learned their lessons very well from the "Supreme Master," John D. Rockefeller, who in 1892 became the world's very first Billionaire.... enough said.  Peace to all ~

Jul 10, 2013 5:30PM
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Please join me and call your local Reps in Congress and demand that they pass legislation to do away with paper oil futures and to force these oil traders to take delivery of the product that they are buying. Wall Street and the Fed are taking this country down a path of destruction where the rich are getting richer and the poor are getting poorer. As gas continues to spike, consumers will cut back on spending and we will find ourselves into another recession, compliments of Wall Street Pigs.
Jul 10, 2013 4:53PM
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Hey Mr. President...you can rewrite & dictate how Americans will deal with Healthcare but you can't do anything about $107 barrel of crude oil. Time to FOCUS!!
Jul 10, 2013 4:15PM
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Where is the leadership we need in the US. We have no real energy policy, just a bunch of wishful tree huggers throwing around subsidies to hide huge losses and inefficiencies of the green energy hoax. We should have been developing a CNG infrastructure so we as a country would be an energy exporter and energy costs for the average american would be less of a burden. Just think how much better off our economy would be if people weren't forking out hundreds a month just to fill up a compact car. CNG allows us to turn the tables and go from huge trade deficits to trade surpluses in a short amount of time.
Jul 11, 2013 3:51AM
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Egypt isn't even in the Top 30 of American oil importers.  This article is a hilarious front for oil company price gouging.
Jul 10, 2013 5:37PM
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Domestic demand is at it's lowest leveles in 10 years and now its increased suddenly   show me the data
Jul 10, 2013 5:45PM
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Oil producers grab at any excuse to increase prices. Blame it on Egypt, but greed is the basic culprit. Soon we will hear about the fear of a flying comet across the face of the moon possibly crashing into an oil field, and prices can jump accordingly. Since 1973 our government and American oil producers have not developed an oil production strategy to keep us supplied at reasonable retail prices. Lessons were never learned from the crisis of the 1970's. What is truly amazing is that oil companies have reported their highest profits in the past two years. Greed will be the ruination of our country. And this greed goes beyond the wells of oil producers.
Jul 10, 2013 5:55PM
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People looking for the "PROBLEM" to fix the problem. Americans  are in forced layoffs or even worse lose their jobs for so called lack of government funds but the same government sends BILLIONS of dollars to other countries to help them while we suffer here.

 

If that doesn't open your eyes to the fact we are a sold out country something is terribly wrong. This country is not a priority to our government. This is why things are the way they are!!!

 

 

Jul 10, 2013 5:03PM
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Traders were not making money when oil was flat. They had to create something to get it moving. It will flame out when they all take their profits and run. Gov't needs to get the banks out of the oil business.
Jul 10, 2013 4:22PM
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NBC, you all told me a week or two ago that gas prices were plunging dramatically.  Whats up?  You all seem to do that sort of thing a lot.  I think its best if you go back to recommending the 10 stocks that were up the most in the past year.  Or, say you recommended them last year.  Who'll bother to look back?
Jul 10, 2013 4:23PM
Jul 10, 2013 5:22PM
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Oil Companies CEO's low on big bonuses, raise the price for Gas at the pumps.  Ha, Ha,  up 10 cents in 7 days.  Oil Traders are at it again.  
Jul 10, 2013 4:37PM
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Is this supposed to be good news?  My G*d people are having enough problems as it is getting by.
Jul 10, 2013 6:01PM
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Is there anybody else out there besides me who thinks that we should have an Open Season On Wall Street and Bernanke?
Jul 10, 2013 5:26PM
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we are paying for the explosion in Canada for all the oil that went up in human smoke, 60 plus dead or missing.  This is Terrorism.  
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