I put off filling up my Jeep until after my errands and, 90 minutes later, the price had jumped seven cents a gallon to $3.75. Now I find out that oil is at $106 a barrel. This feels familiar.
The gas price run-up of 2008 put the hurt on everyone’s wallets, and once again we are staring down the barrel of rapidly rising gas prices. And again, it seems like it is rising for no reason. Sure, there is the unrest in North Africa and the Middle East, but Saudi Arabia is making up for the loss of supply by increasing their output.
It is oil speculators who put money on oil futures that are running up the prices. They are hedging bets against where oil prices may go, causing prices to fluctuate. In fact, big energy traders are hedging huge bets that oil prices will continue to go up, with nearly twice as many long contracts on oil open as the last big speculation run up in 2008.
Meanwhile, the U.S. Strategic Petroleum Reserve actually has more oil stockpiled than at any point in the last five years, and all the unrest hasn’t affected global output at all.
The one bright side? If everybody in the Middle East settles down, oil prices could come plunging back to Earth. I think I’d rather see a bunch of Middle East dictatorships fall than gas prices though.
Source: CNN
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. You can follow his slow descent into madness at Sublime Burnout.