What's Behind The Recent Hike In Gas Prices?

I heard this on the radio this afternoon. They also discussed whether or not it might affect the presidential election. I didn't see any mention of the fact that the oil companies have paid off the Republican candidates to deny the reality of global warming. So it's in the interest of oil industry for there to be conditions that might adversely affect President Obama's chances of getting re-elected. And there was no mention of a previous gasoline shortage which drove up prices, and turned out to be caused by speculators. I have to admit, when people were first claiming that, I thougt they were being paranoid. Of course, NPR gets corporate donations from big oil companies.

http://www.npr.org/2012/02/22/147261788/whats-behind-the-recent-hike-in-gas-prices

February 22, 2012

Oil prices have jumped sharply in the past two weeks, and the price of gasoline is also moving up. Across the country, a gallon of regular costs nearly $3.60 on average, with some areas facing $4 gas. That's causing sticker shock at the pump, and concern that rising prices could derail the economic recovery.

According to Daniel Yergin of Cambridge Energy Research Associates, gas prices are up because of the West's current confrontation with Iran and sanctions over that country's nuclear program.

"Right now the market focus is on a tightening of supply, because the whole direction of these policies is to do one thing, which is to reduce Iran's ability to export oil," Yergin says.

That's driven crude oil prices in the U.S. to around $106 a barrel. But Fadel Gheit, senior energy analyst at the investment firm Oppenheimer and Co., says there's an even bigger reason than Iran.

"The supply of gasoline has been declining," Gheit says. "We have 700,000 barrels of refining capacity [that were shut down] in the last three months. That is almost 5 percent of U.S. gasoline production ... now offline."

Energy analyst Phil Verleger says that's an amazing drop in refining capacity.

"I've been following the industry since 1971," he says, "and never in my life have I seen so many refineries close all at once."

[...]

"Because the global market is much more lucrative than the domestic market, for the first time in our history we are not importing gasoline," Gheit says. "Not only are we not importing gasoline, we're actually a net exporter of gasoline."

So while gasoline supplies are short and prices are rising, big U.S. oil companies are exporting gasoline. Ironically, that's because natural gas prices in the U.S. are so low. American refiners are using this cheap, domestic natural gas to produce the heat needed to crack crude oil into products like gasoline.

[...]

"For the first time in my life I'd say that this time higher oil prices might actually stimulate a little more economic activity rather than a little less economic activity," he says.

That's because the higher prices are causing many people to buy fuel-efficient cars, boosting the output in one of the country's major industries.


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