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Gas prices expected to soar. What gives?

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Such an increase in oil prices does not automatically herald a rise in gasoline prices, especially if it mainly erases a discount that benefited refiners in one region of the country. Moreover, gasoline and crude oil as commodities move in separate markets, linked but not in lock-step.  Over the medium-to-longer term they must clearly be connected, but in the short term each responds to distinct forces of supply, demand, inventories and expectations. 

After Widening for Two Years, A Crucial Gap Closes

Starting in 2011, West Texas Intermediate (WTI) crude, the main US oil benchmark, traded at an increasingly deep discount to Brent, a North Sea grade that was Europe’s main oil benchmark, and more recently the world’s. For decades, these two crudes had traded near parity, plus or minus a buck or two a barrel. Several factors changed that. The biggest was the rapid growth of production from unconventional sources in the middle third of North America: shale oil and upgraded oil sands crude. From West and South Texas to North Dakota and Alberta, Canada a wave of new oil overwhelmed existing pipeline capacity, some of which was pointed in the opposite direction to carry imported crude into the mid-continent.

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