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Gas prices soar past $3.50 per gallon: Are Middle Eastern uprisings to blame?

Gas prices have been only modestly affected by fighting in Libya, but a 'fear factor' is driving up oil futures, which in turn drive gas prices.

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Gas prices are posted in Santa Cruz, Calif., on March 7. Pump prices have jumped an average of 44 cents per gallon since the beginning of the year, propelled by a $20 per barrel oil price increase since December 2010.

Marcio Jose Sanchez / AP

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Americans are paying an average of $3.51 per gallon to fill up their gas tanks, a number that for many is synonymous with "Ouch!" Gasoline pump prices are up 13 percent in the past month, and 4 percent in just the past week, according to AAA's Fuel Gauge Report.

The rapid run-up is unusual, and some economists worry it could throw sand into the gears of an economic recovery – just as much-needed new jobs are starting to arrive.

What's going on here? Is the price spike justified by populist uprisings in Libya and other oil-producing nations?

The answer is complex, although one thing is fairly clear: The jump at the gas pump hasn't outpaced the rising price of the key ingredient – crude oil. No need to go looking for conspiracy theories involving gas-station managers.

Oil traded at about $105 per barrel Monday, as investors fretted about the possibility of a protracted civil war in Libya. Global oil prices have risen about 36 percent over the past year, during which time the average US retail price for gasoline rose about 28 percent.

Whether you measure over a month or a year, gas prices are rising at about the expected rate, say industry analysts, given that oil accounts for roughly two-thirds of the price of gasoline. (Other key factors behind gas prices are the costs of refining, distribution, and taxes.)

As for the price of oil itself, industry analysts differ over whether the $105 range is justified. Much of the recent run-up reflects fears of what could go wrong with oil supplies, rather than with actual disruptions, they say. At the same time, fear and speculation are a normal part of oil-market prices, as traders weigh the expected value of future deliveries.

"There is a strong fundamental case underpinning the oil price rise" when viewed in that context, says Richard Swann, who tracks the oil market at Platts, a leading information provider on the energy industry.

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