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.
And after last year’s $4-a-gallon-gas-fears, consumers can rest easy that this year’s national average won’t hit the $4 mark. “We’re not expecting that to be the case with the national average,” says Green. “We currently believe it will peak at a lower price than last year,” when gas hit $3.94 a gallon in April.
(No consolation to consumers in some parts of the country, like California, where average prices are already at $4.05.)