Gas Prices Will Continue to Rise Until U.S. Builds More Refineries: GasBuddy Analyst
After falling steadily in May and June, gasoline prices have risen 25 cents per gallon in the past month, putting renewed pressure on consumers’ budgets. Prices nationwide are now averaging $3.68 a gallon and have topped $4 in California and Illinois.
Patrick DeHaan, senior petroleum analyst at GasBuddy, an online site for gasoline consumers, says unexpected shutdowns at two U.S. refineries are largely responsible for the recent jump in gasoline prices.
But those shutdowns aren’t the only reasons gasoline prices are spiking.
The price of crude oil, from which gasoline is made, is rising following production outages in South Sudan and the North Sea. Declining output from Iran as a result of an oil embargo by many Western nations has also caused a jump in prices at the pump. And the price of ethanol, a required additive for gasoline sold throughout the U.S., has spiked because of the drought in the Midwest—the worst in more than 50 years. That drought has hammered the corn crop used in ethanol production, pushing up corn prices almost 60 percent in the past two months.
“Ethanol prices may continue rising for at least another month or two and that will continue to put upward pressure on gas prices” says DeHaan.
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Tapping Into Oil Reserves Will Raise Prices?
http://finance.yahoo.com/news/tapping-oil-reserves-raise-prices-183839704.html
Even during the worst market swings Dennis Gartman keeps his cool. But he’s hot under the collar about this.
Published reports suggest that the White House has “dusted off” plans for potentially tapping the Strategic Petroleum Reserve (SPR). (More from CNBC.com: US Reliance on Saudi Oil Grows)
Although market rumor suggested the move may be political — an effort to keep prices at the pump under control into the election — a source with knowledge of the discussions said a release would be intended to prevent rising energy prices from undermining sanctions against Iran.
But esteemed commodities trader Dennis Gartman doesn’t care about politics - he cares about profits - and he says tapping the SPR could have an unexpected consequence.
Because the SPR was only intended to be used in emergency situations if the administration releases reserves in the current market environment, Gartman doesn’t think it will have the same impact.
“Yes, in the very near term oil prices (New York Mercantile Exchange: CLCV1) will fall, he says, but we’re not in a distressed market as would be the case after an attack or natural disaster. There’s no serious issue.
“Therefore, the market will quickly come to expect the oil to be repurchased and replaced. And if a big buyer steps into the market in the form of the US government, speculators could drive oil to new highs.”
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