If you haven’t noticed yet, gas prices are on the rise. In some areas they’ve hit over $5.00,… but why? Let’s look at few theories out there right now.
Theory #1 Typically, the demand for gas spikes during the summer months when lots of people go on vacation. Holidays like Memorial Day and the Fourth of July create traffic during the summer and bring in out of town tourist. This high demand usually translates into higher gasoline prices. But, it’s not summer yet, so that theory doesn’t quite fit.
Theory #2 President Obama is actually driving up the oil and gas prices so that the US is forced to look for alternative, sustainable methods of energy.
Record high prices at the pump would, and do, in fact, encourage people to seek out alternative energy driven vehicles like the electric or hybrid cars, but is President Obama’s out there with the long pole changing the prices at each gas station? No. In fact, In March 2011, as prices started to rise again, President Obama announced the formation of a task force to examine the oil markets.
Theory #3 Price increases occur when the crude oil markets tighten, and lowers inventory. Also, growing demand can sometimes pace refinery capacity. In the spring, refineries perform maintenance which can place a pinch on the gasoline market. By the end of May refineries are usually back at capacity.
This would actually fit.. if our inventories were low. They’re not. Supply is much higher and the US is currently EXPORTING oil out because demand for it here in the United States is much lower than abroad. Think about it. Who is driving on long holidays trips in February? Some of us aren’t even driving to work. Some don’t even have a job to drive to. On top of which, for those that pay attention to the foreign markets, this is happening around the world, not just here in the US.
So, where does that leave us?
Theory #4 Oil speculators. Oil speculators react to what they see. Sometimes they overreact at what they are seeing, and quickly move their money causing huge shifts in the market. So what are they seeing that may be causing this? Let’s look, once again, at the foreign markets, more specifically the middle east, where much of our oil comes from. Syria is currently in revolt, and both Secretary of State, Hillary Clinton, and Senator John McCain have stated the US needs to step in. On top this, diplomacy measures have been skipped in favor of financial sanctions with Syria’s neighbor to the east, Iran. So are we looking at another war in the middle east? Oil speculators and big money seem to think so.
Here is what Senator Bernie Sanders said this morning March 6, 2012.