The Commercial-News, Danville, IL

Community News Network

February 6, 2013

Gasoline prices surge for third straight winter

(Continued)

Gasoline futures, traded on the New York Mercantile Exchange, have rocketed higher since mid-January. The price of futures contracts has risen 12% since the middle of last month.

At the same time, the price of crude oil has also been rising. Why? Not really because of supply. In fact, America's appetite for oil continues to decline while the country's domestic oil production continues to rise.

The Wall Street Journal links the rise in crude prices to pipeline problems, making it difficult to move product around the country. In other words, we have plenty of oil, we just can't get it where it needs to be. Because of that, the price rises.

Where's the demand?

If consumers were buying more gasoline, that would certainly help explain the recent rise in gasoline prices, both at the commodities market and the retail levels. But that isn't the case.

The U.S. Energy Information Administration (EIA) reports gasoline demand in the U.S. peaked in 2007. Last year's demand was a half-million barrels a day below that. Not only are people driving less, they're driving more fuel-efficient cars. Yet the amount of money they're shelling out for fuel continues to rise.

When consumers are suddenly hit with a big increase in gasoline prices, it has much the same effect as raising their taxes or cutting their pay. The effect on the economy can be toxic. In 2011 the economy was beginning to show signs of life when the large spike in gasoline prices coincided with the economy hitting what economists described as a "soft patch."

Futures prices retreat

That said, it's possible gasoline prices may level off, or perhaps even drop a few cents in the next couple of weeks. Energy traders in the futures market in recent days have begun selling their long positions. As a result, gasoline futures prices actually retreated a bit this week. Oil prices have also declined before hitting the $100 a barrel mark.

Text Only
Community News Network
E-edition
AP Video
Power to Be Restored After Wash. Wildfire Crashed Air Algerie Plane Found in Mali Israel Mulls Ceasefire Amid Gaza Offensive In Case of Fire, Oxygen Masks for Pets Mobile App Gives Tour of Battle of Atlanta Sites Anti-violence Advocate Killed, but Not Silenced. Dempsey: Putin May Light Fire and Lose Control Arizona Prison Chief: Execution Wasn't Botched Calif. Police Investigate Peacock Shooting Death Raw: Protesters, Soldiers Clash in West Bank Police: Doctor Who Shot Gunman 'Saved Lives' 'Modern Family' Star on Gay Athletes Coming Out MN Twins Debut Beer Vending Machine DA: Pa. Doctor Fired Back at Hospital Gunman Raw: Iowa Police Dash Cam Shows Wild Chase
NDN Video
Doctors Remove 232 Teeth From Teen's Mouth Bradley Cooper Explains His Voice in 'Guardians of the Galaxy' Deja vu: Another NYPD officer choke-holding a suspect 'Fifty Shades of Grey': Watch the Super Sexy First Trailer Now! Reports: Ravens RB Ray Rice Suspended For 1st 2 Games Of The Season Chapter Two: Becoming a first-time director Air Algerie plane with 119 on board missing over Mali Diamond Stone, Malik Newman, Josh Jackson and others showcase talent Free Arturo - The World's Saddest Polar Bear A Look Back at Batman On Film Through The Years LeBron James -- Dropped $2k On Cupcake Apology ... Proceeds To Benefit Charity Snoop Dogg Says He Smoked Weed at the White House Raw: Fight Breaks Out in Ukraine Parliament Chris Pratt Interrupts Interview To French Braid Intern's Hair Shirtless Super Mario Balotelli Dances While Ironing - @TheBuzzeronFOX Whoa! Watch "Housewives" Star Do the Unthinkable LeBron apologizes to neighbors with cupcakes Justin Bieber In Calvin Klein Underwear Shoot Samsung Pre-Trolls The IPhone 6 With New Ad Jimmy Kimmel Introduces His Baby Girl
Must Read