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.
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.
More on Smart Spending
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!
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 ~
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!!!
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