What's causing high gas prices? - WTVM.com-Columbus, GA News Weather & Sports

What's causing high gas prices?

(Source: CNN) (Source: CNN)

(CNN) - Gas prices have gone up 21-days in a row.  According to AAA, the national average climbed another two cents last night.  It's now $3.72 a gallon.

Republican presidential candidates blame President Obama. There are a lot of factors that go into determining what you pay at the pump.

The price of a barrel of oil accounts for about three quarters of the price of a gallon of gas. So a significant move up or down in oil prices should, within days, be reflected in prices at gas pumps worldwide.

US crude has been getting more expensive, going from $80 a barrel last October to about a $1.10 a barrel now.  That's an increase of 40% in just five months.

What Americans may be seeing at the pump right now is gasoline catching up with the price of oil.

Gas prices are actually up only 9% since October, from $3.40 a gallon then to $3.70 a gallon now. 

If they had really tracked the price of oil, gasoline would be selling at a national average of  $4.70 a gallon.  

Gas prices are higher and absent is a clear and obvious culprit. Americans and their politicians in this election year are pointing fingers. 

Legendary oil investor T. Boone Pickens says blaming speculators is a tired old saw.

"That's the first thing that politicians will say the speculators are doing it and when anybody comes out with that as the first reason and they can't give you anymore to talk about than speculators, than that they don't know what they're talking about," said Pickens, Oil Investor and Chairman, BP Capital Energy,

Pickens says the mix of increased global demand and just the potential loss of the 2 million barrels per day that Iran currently supplies the world, has investors worried. 

Iran has threatened to shut down the strait of Gormuz, a choke point on the eastern end of the Persian Gulf – just 21 miles wide at its narrowest point - through which an estimated one-fifth of the world's oil passes. 

Iran depends heavily on the revenues from that oil, and may not want to jeopardize them.

Still, companies like airlines, which actually use oil, speculate on it to protect their businesses, and hedge against price spikes.  

Others, investors who will never need the oil, invest just for profit.

Between the tension around Iran, and increased global demand for oil, the profiteers are betting there's no way oil prices will drop. 

But are they actually driving the price higher themselves?

"There [no one's] running up the market on the speculative basis. The market is moving up because all supplies are tied globally.  From there, you can goose it up a little bit, but not much," said Pickens.  

There may be another reason for the sudden gas price spike: U.S. oil production is up, but gasoline consumption is down, leaving the U.S. with more gas than it needs.  

So instead of excess gasoline driving prices down, "In the last six months not only did we stop importing gasoline, we are actually exporting gasoline. The total drop in supply of gasoline available to consumer in the U-S is down about one and a half million barrels a day," said Fadel Gheit, Senior Oil Analyst, Oppenheimer.

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