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Gas prices hit a historic high: What's driving them up?

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In fact, crude oil prices have risen 10 percent during the past two months, and the price of crude accounts for almost 70 percent of the cost of a gallon of gas, according to the US Energy Information Administration (EIA).

Seasonal changes. Refineries usually shut down for maintenance in late winter, temporarily reducing gas supplies. As per federal requirements, refineries also begin transitioning at this time of year to summer blend gasoline – a more environmentally-friendly, and expensive, blend to produce. This reduces current winter blend gas supplies.

Financial market speculation. In addition, the rally has been driven by earlier-than-usual speculation that demand for oil will rise, further inflating prices, says Mr. Kloza. In a recent Commodity Futures Trading Commission report, Kloza said he calculated that there is about $45 billion more bet on higher petroleum futures than on lower ones. In other words, more traders expect oil prices to rise in the future than to fall, an expectation that causes oil producers to horde oil in the hopes they can sell it at higher prices later on. That dries up current supplies and translates to higher prices at the pump, which Kloza says we’re already seeing.

“The skew is always bullish, but this is really early for such a one-sided money flow,” he says.

What can consumers expect in the coming months? The bad news, says Green, is that gas prices will continue to rise for the next couple of months.

“Gas prices will continue to rise through April until the seasonal transition process comes to an end,” he says.

But there’s good news: The snowstorm that swept across the northeast Feb. 9 and 10 didn’t damage any pipelines or refineries and kept people off the roads, softening demand and potentially dampening gas prices.

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