Paying More at the Pump

Posted by - Friday, August 17th, 2012

If you drive a gas-powered vehicle, you've probably filled up at the pump recently. And if you've filled up, you've noticed the spike in gas prices.

The national gasoline price average is $3.68 a gallon. Prices fell through May and June, hitting an average of around $3.4 in mid July, but they're on their way back up, jumping 25 cents in the last month. Residents of California and Illinois are already paying $4 a gallon.

Patrick DeHaan of GasBuddy talked to Yahoo about the reason behind these price jumps.

The national average, he says, is deceiving, because some areas are much worse off than others, and these locations have skewed the average.

But prices everywhere have been rising. A fair amount of this is a result of foreign oil issues.

Gasoline prices are dependent on crude oil prices. And crude oil prices have been rising.

Exports from South Sudan have been halted as the new nation works out export taxes with northern neighbor Sudan. The North Sea has also had drops in production. And a number of Western nations, including the U.S., have placed an oil embargo on Iran, lowering its production.

Meanwhile, the U.S. is having its own issues contributing further to the rise in prices. Several U.S. refineries have halted production, such as Chevron's San Francisco refinery, which caught fire this past week, and several refineries in the Great Lakes.

The drought that has covered the majority of the United States is also responsible, lowering corn output and raising the price of ethanol.

From Yahoo Finance:

“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.

While not much can be done about the drought, something can be done about U.S. refineries. “We should look at the oversight of these facilities,” says DeHaan. “They constantly seem to be breaking down.”

Prices will likely lower again after Labor Day and as we approach the holiday season, hitting a low near Thanksgiving or Christmas, DeHaan said.

However, oil prices did drop to $95 a barrel today after three days of gains after news reports suggested the U.S. might tap its stragegic reserves in order to keep a lid on rising prices.

Brent crude was down by $1.51 to $113.74 a barrel on the ICE Futures exchange in London.

In the meantime, there's not much we gas-powered vehicle owners can do, except maybe find the cheapest gas station around. DeHaan's website, GasBuddy, can help you find low gas prices in your region. Check it out here.

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