What's Up with Gas Prices?

A gallon of regular now averages about $3.19 per gallon in the United States. This is up from $2.65 per gallon last February. 

There's no mystery as to why gas prices have jumped. It's largely because the price for a barrel of crude has gone up from the 2010 average of about $75 per barrel to hover around $100 per barrel today. Most of the rise is the jittery response of markets to the "Arab Spring" uprisings in Northern Africa and the Middle East.

In 2008, the world saw oil prices rise to $146 per barrel as global spare production capacity tightened to just 1.5 million barrels per day. With the onset of the global recession, spare production capacity increased to over 6 million barrels per day and the price of oil fell briefly below $30 per barrel.

Today, the Energy Information Administration expects that OPEC surplus production capacity will remain above 4 million barrels per day during the next 2 years. Of course, a lot of this spare capacity is in Saudi Arabia. If the Arab Spring blossoms there, plan to spend a bit more at the pump. 

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  • Old Mexican||

    Of course, a lot of this spare capacity is in Saudi Arabia. If the Arab Spring blossoms there, plan to spend a bit more at the pump.


    I am already accustomed to that - I lived in California for a while, you know...

  • Fiscal Meth||

    I wish I could find gas for $3.19/gallon

  • P B||

    Don't forget we are devaluing the dollar as well.

  • ||

    That really should be remembered in all this.

    http://www.crbtrader.com/data......&sym=BWY00

    It's not like the price of oil is going up while everything else is standing still.

  • Fiscal Meth||

    When you look around and notice that everything seems to be shooting up into the sky, it's time to consider that you might be falling.

  • ||

    As long as I don't look down, I won't fall.

    So sayeth the ACME Manual on Gravity.

  • Old Mexican||

    But... But... but SM told me there was NO inflation! None! I mean, do you know the Nash Equilibrium? Do you?

    Heathen!

  • Mo||

    The price of food is highly correlated with the price of oil because of things like ethanol subsidies and agriculture is a petroleum intensive industry.

  • ||

    The only gripes I have about fuel prices are that they include a great deal of taxes that do not simply go to road maintenance, and they are artificially higher because our government limits production and refining of oil through regulation as opposed to legislation.

    In both ways, the free market is manipulated. In neither instance do people have a way to hold anyone (like their Congressman) accountable.

  • robc||

    Price of gold: $1414.18 per ounce
    Price of crude oil: $97.60 per barrel

    Ratio: 14.49

    Almost exactly the historical average. 10-20 is the normal range. When it gets below 10 or above 20, there are big profits to be made.

  • ||

    paid $3.49 a gallon on Saturday. With a car that gets 12MPG in the city, it hurts a bit. Damn LT1 engine is a thirsty beast but oh, so fun.

  • Cruz||

    Little over a week ago I noticed the discount grocery store gas at 3.07 meanwhile the shell by my house had their gas at 2.94 a gal. So I filled up all the way, next day Gas had gone up to 3.14 where it has stayed out. Of course getting rid of my camaro in 2005 and getting a 5 speed Honda Civic has paid off beautifully. 32.00 to fill up

  • ||

    Don't worry; the same geniuses who want us all to leave our cars at home and take a train are agitating to crack open the spigot on the Strategic Petroleum Reserve.

  • Brett L||

    Its like the worst of Bush, Clinton AND Carter!

  • pancakes||

    crack open the spigot

    Call me Shirley, but doesn't this turn of phrase seem a bit stupid. I've heard ethanol, Alaska, and shale gas all called spigots. If these things were actually spigots of sweet, sweet energy we'd already have turned them on, yeah?

    I just hate "spigot" used in the context of natural resources.

  • ||

    Huh? What do you think the word "spigot" means? A spigot is a faucet, plug, cock, or other control that controls the flow of liquid from a pipe, more broadly and metaphorically from any source. We easily could be producing more of these liquids from their source, but are choosing not to. Hence the turn of phrase is appropriate, even if it is a bit of a metaphor by using it in reference not to a physical spigot but to a regulatory spigot.

  • dhs||

    'we' and 'choose'

  • H man||

    Reopening the Gulf of Mexico oil wells would help. But that's not what Mr. Green Energy wants is it.

  • Mike M.||

    True. There is good news however: it has just been discovered that the Marcellus shale deposits are far bigger than what anyone originally thought. It has in fact turned out to be one of the biggest petroleum finds in the last thirty years: America's proven oil reserves just basically doubled overnight.

    Once the psychopath is out of office, we'll be able to actually start using our natural resources once again, which will help out quite a bit.

  • Gray Ghost||

    Shale gas /= crude oil. But it is a very nice thing to have, for running power plants and as a chemical feedstock. Not sure on the economics of turning natural gas into gasoline; I don't believe it's currently economical.

  • Mike M.||

    It's true that finding shale isn't as nice as discovering light sweet crude, but it still counts as petroleum reserves. I believe that using current technologies the fracking process is economical when the price of crude is over $90. And it's likely that the process will only improve and become even more economical over time.

  • Gray Ghost||

    Bit far afield, and I should get off my ass and do my own research, but by "fracking", are you referring to hydraulic fracturing---the process of improving permeability in gas bearing shales---or are you referring to the process of catalytically combining components of natural gas to form the C8 and higher chains that make up gasoline? In my earlier post, I was referring to the second. The first is interesting, I had no idea at what price per MMBtu hydraulic fracturing makes a reservoir economic to exploit. Still doesn't get you gasoline, but it is nice.

    I really think the real game changer will be when someone figures out a way to economically produce natural gas from methane hydrates. The size of those potential reserves are staggering. Currently, hydrates are just another unwanted PITA you have to account for in deepwater O&G drilling and production.

  • prolefeed||

    Most of the rise is the jittery response of markets to the "Arab Spring" uprisings in Northern Africa and the Middle East.

    Bullshit. Look at the graph. The price of gasoline has been rising fairly steadily since it hit a bottom in 12/2008.

  • Jersey Patriot||

    Yeah, I don't know what shit he thinks he's pulling here. Oil was about $90 a barrel before the Arab uprisings, it's now about $100. The uprisings had nothing to do with the rise from $40 to $90 over the past two years. Citing the "2010 average" here is extremely misleading.

  • robc||

    If you price it in terms of gold, oil has been relatively flat since then.

    We are still on a gold standard. Its hidden because of the silly "dollars" people keep referencing.

  • Heroic Mulatto||

    We are still on a gold standard. Its hidden because of the silly "dollars" people keep referencing.

    "People"? No. Lizard People? Yes!

  • robc||

    Speaking of which, did Minnesota award thye lizard people their proper vote total?

  • ||

    Yes, but the cold-blooded vertebrates are only counted as 13/64ths of a mammal.

  • MJ||

    But it may be explanation as to why gas prices have spiked so high while crude prices are not nearly as bad.

  • ||

    My future ride:
    http://www.slate.com/id/2286292/slideshow/2286323/

    No, I am getting close to retiring, and I think zipping along with the wind in my toupe would be fun...

  • ||

    It is because of price gouging, plain and simple. It is obvious, congress should be investigating the oil companies to look for evidence of price gouging. We need a tax on oil profits in order to bring the price down.

  • ||

    Ironic snark, or sincere ignorance?

    I honestly can't tell.

  • Almanian||

    I'm with you - that's high quality either way.

  • Vermont Gun Owner||

    Poe's Law.

  • prolefeed||

    We had a state senator who sounded just like Jim, who briefly succeeded in pushing through gasoline price control legislation before cooler heads prevailed.

    Took a drunk driving charge to get the bugger kicked out of office.

  • Old Mexican||

    Re: Jim,

    Maybe we need a price cap on gasoline, like Nixon imposed. Yeah, a great idea!

    http://www.fiendbear.com/gasline.gif

  • ||

    There's nothing like a windfall profits tax to spur exploration and production!

  • Almanian||

    *facepalm*

  • Jersey Patriot||

    Today, the Energy Information Administration expects that OPEC surplus production capacity will remain above 4 million barrels per day during the next 2 years. Of course, a lot of this spare capacity is in Saudi Arabia. If the Arab Spring blossoms there, plan to spend a bit more at the pump.

    Let's remember that the 4m bpd number is self-reported by Saudi Arabia and isn't audited by any outside agency, or even OPEC itself. No one outside Saudi Arabia actually knows if they have 4m bpd to spare or not.

  • ||

    I just hate "spigot" used in the context of natural resources.

    Okay.

    The Strategic reserve is (ostensibly, at least) an actual physical reserve, in tanks. Open the spigot(s), oil comes out.

  • pancakes||

    You're right, that's why I conveniently didn't mention it. Spigot Spigot Spigot. Such a silly word.

  • Vermont Gun Owner||

    I haven't driven much lately (just a mile or so to and from campus on the weekends) so I wasn't even aware gas had gone up recently.

  • Almanian||

    Open the spigot(s

    When I envision this, I always hear Master, saying, "Embargo lifted...."

  • Paul||

    A gallon of regular now averages about $3.19 per gallon in the United States.

    Wow, you kids in flyover country get off easy. I paid $3.45 for regular unleaded this morning.

  • prolefeed||

    It's running closer to $3.70 a gallon here on Oahu.

  • Paul||

    Oahu is the ultimate non-flyover country. One of these days I'm gonna take me a trip out there.

  • Almanian||

    Reason should do a cruise to Hawaii - that would rule.

  • ||

    They could tell him the wrong departure time and "accidentally" leave STEVE SMITH behind.

  • ||

    Wow, I don't remember that dive in prices in November 2008. Was that an Obama election celebration?

  • Paul||

    I do. I had a bet with a fellow traveler that gas would go under $2 per gallon, but it didn't go before the bet deadline, so I lost. Here in washington, it snuck just under $2 per gallon for a very short time.

  • Vermont Gun Owner||

    I would have taken that bet. I didn't think it was going to stay close to $4 (I never actually broke the mark, I managed to max out at $3.99), but I didn't think it was going to drop nearly that much.

  • Paul||

    In fact, you have to remember that dip? Don't you remember all of the people that bought gas contracts for the low, low price of $4 per gallon, and how when the price tanked (ha!) they were trying to get out of their contracts?

  • ||

    Most of the rise is the jittery response of markets to the "Arab Spring" uprisings in Northern Africa and the Middle East.

    Pure bullshit.

    Most of the rise is due to the value of the dollar falling because the FED has been printing new dollars like mad men for the past 3 years.

    The price of oil has not been going up instead the value of the dollar has been going down. Supplies of oil have been good and demand is down....and it has been that way for the past 3 years. The only thing that has changed fundamentally is that the value of the dollar has dropped.

    Has the "Arab revolution" caused a little bitty bump in oil prices? Sure. But that bump is in no way the cause of our nearly $4 a gallon gas prices.

  • Cruz||

    Didn't Kuwait kill something like 17% annual inflation rates by getting off the dollar?

  • ||

    Since the US gets most of it's oil from Canada, they must be making a killing?

  • Cassie||

    Here on Florida’s west coast, where we have already taken a beating in housing and unemployment, the price is currently $3.35.

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