Gas prices: why $2 gas isn't happening anytime soon

Gas prices rose 4 percent in the US this week, according to AAA. Despite a boom in North American oil production, gas prices won't be approaching $2 anytime soon. 

|
Mike Blake/Reuters/File
Consumers purchase gasoline at a gas station as a plane approaches to land at the airport in San Diego, Calif. While US oil production gains mean fewer imports, there appear to be few guarantees for energy security, and lower gas prices, in the near term, Graeber writes.

U.S. gasoline prices are expected to remain volatile for the month because of geopolitical fallout in the Middle East. Concerns over the global oil supply are fading away from the minds of most consumers and few people care even less about the unrest in Egypt. A weekend survey said gasoline prices were in decline, though that did little to ease the minds of American commuters scratching their heads at the pump during the first major heat wave of the season. A year ago, American consumers were paying substantially less for gasoline.  While U.S. oil production gains mean fewer imports, there appear to be few guarantees for energy security, and lower gasoline prices, in the near term.

Motor group AAA reports an average Monday price for a gallon of regular unleaded gasoline of $3.61. That's more than 4 percent higher than last week, which translates to a 2 cent increase every day since July 8. A weekend assessment from Lundberg Survey said gasoline prices declined by less than 1 percent compared to last month. The U.S. Energy Department said it expects gasoline prices for the season to level off at around $3.50 or so, though that's still higher than the $3.39 average reported year-on-year. (Related article: BP to the Rescue for Midwest Drivers)

Former House Speaker and presidential hopeful Newt Gingrich said a then-struggling U.S. economy can't afford to spend billions of dollars overseas to buy foreign oil when there was plenty of that Texas tea at home in the United States. Gasoline prices, he said, could drop to $2.00 per gallon if drilling activity increased dramatically in the United States. A year later, nearly 90 million barrels of oil was produced worldwide and almost half of that came from new drilling operations in the United States. Gasoline is still nowhere near $2.00 per gallon even though the United States is mentioned in the same breath as Saudi Arabia. 

The International Energy Agency said this week fears of so-called peak oil are more or less unfounded in part because of production gains from the United States. Production from the Bakken formation in the Northern Plains states helped move the North Dakota economy from failure to frenzy in roughly a decade's time. Issues overseas, however, are driving domestic gasoline prices higher as oil on the international market stays above the $100 per barrel mark for the first time since last year. (Related article: Why Gas Prices are Unlikely to Fall Anytime Soon)

Those like Gingrich and the American Petroleum Institute said building a pipeline like Keystone XL would shield the North American economy from the overseas turmoil wreacking havoc on retail consumer markets. API says 70 percent of the people it surveyed said Keystone XL would help with national security issues tied to energy markets. A rival survey of public opinion from the Pew Research Center found 83 percent of the people in the United States wanted the government to focus more on domestic issues and leave foreign affairs to the foreigners. For energy matters, however, those two issues mix.

Gingrich and his supporters said a dramatic new way of thinking about U.S. energy potential would shield the North American economy from overseas turmoil. That's done little, however, to persuade U.S. refiners that they're the ones, not retailers or consumers, that have to cover the costs for price increases in the global energy market.

Source: http://oilprice.com/Energy/Gas-Prices/So-About-that-2-gas-.html

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Gas prices: why $2 gas isn't happening anytime soon
Read this article in
https://www.csmonitor.com/Environment/Energy-Voices/2013/0716/Gas-prices-why-2-gas-isn-t-happening-anytime-soon
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe