If we're using less gas, how come prices keep going up? Here is some of my input:
Some U.S. refineries have even begun exporting their fuel abroad ( I have mixed feelings about this ), yet the average price of a gallon of gas is higher ever for the month of February, when prices are typically lower than they are at their summer peak.
Why? Well, for one thing, the United States remains an enormous consumer of gas, with demand in the proximity of 350+ million gallons a day, and demand is still growing in many other countries.
If we had even a 7% decline in demand it makes very little difference, given how much gas we use and the increased demand in nations like Brazil, China and India. Our drop in demand does not begin to offset the increased demand in those countries.
Demand from businesses and consumers isn't the only reason oil and gas prices are at historic highs for this time of year. The so-called ’Arab Spring’ movements across the Middle East last year prompted markets to speculate that supplies could be cut off. That speculation helped drive up the U.S. gas price from about $3 a gallon on Christmas Day 2010 to around $3.30 last Christmas.
Gas prices always begin rising as the weather warms and refineries start producing more warm-weather blends. This time, however, they're starting from a higher base. Refineries out here have maintenance and other matters generally accomplished before peak demand.
One has to also take into account these designer blends of gas, which account for higher prices in some areas.
Also in the mix:
Iran has threatened to withhold oil sales to Europe and block the Strait of Hormuz, the waterway through which 20 percent of the world's oil flows.http://en.wikipedia.org/wiki/Strait_of_Hormuz
Not mentioned here is the recent closing of several older US refineries that are no longer competitive. Several of the east coast refineries used imported oil so one consequence of that is that more of the gasoline we produce is refined from North American crude instead of imported crude. Some but not all of the capacity lost from the closed refineries has been made up by increased utilization of others. These are just some of the factors contributing to the current price of gas.
Is there speculation in the oil markets?…Absolutely!…as in any commodities market, but there are other factors.