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US Consumers Continue to Struggle With Mounting Prices

Despite significant progress in improving domestic supply, American consumers are still suffering with gas prices at the pump. In large part, this reflects ongoing market uncertainty surrounding geopolitical developments – particularly in the Middle East. The Boston Globe asserts:

Even though oil imports are approaching 20-year lows, and the United States is enjoying a boom in new fuel sources, gasoline prices are soaring again because of political troubles halfway around the world. The civil unrest and military coup in Egypt — a relatively small exporter of crude oil — and the ongoing in-fighting in Syria have energy markets worried that the unrest could spread to other oil-producing countries in the region, disrupting supplies…

…And though the flow of imported oil has been steadily falling, the United States remains a huge consumer of foreign fuel and will continue to be subject to global events, said Jason Schenker, president of Prestige Economics LLC in Austin, Texas.

“It’s still a global market,” said Schenker, whose financial consulting firm monitors the global oil industry. “We’re subject to global demand because we’re still importing millions of gallons per day from overseas.”

An article by ABC News corroborates this interpretation.

…unrest in the Middle East that is creating instability in the global oil markets. “Anytime Egypt gets in trouble, knee jerk reaction is go out and buy some crude oil. And the price of crude has shot up, finally kicking in at the pump,” said Jeff Macke from Yahoo Finance.

However, a CNBC article points to a different, but equally significant factor in gas prices: hurricane season.

“The 500-pound gorilla that’s ready to walk in the door is the upcoming peak of hurricane season” in August, DeHaan said. After Hurricane Katrina damaged refineries in the Gulf of Mexico in 2005, spiking prices and stretching supply, major storms moving in that direction generate concerns. And that can edge crude prices up.

All in all, a number of factors have combined to shoot up prices at the pump. Consumers and fleet managers most sensitive to these drastic moves would be wise to lock in prices in the late fall as they reach their typical lowest point.

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