Are Gas Prises Going Up? Yep!
That September drop you were expecting for gasoline prices? Don't hold your breath.
Currently, gasoline averages $3.55 a gallon nationally, down from $3.63 a month ago. Most analysts expected a drop to about $3.40 by early fall, as seasonal demand slumps after the summer driving season. Now, some forecasters predict a short-term spike of up to 10 cents a gallon.
According to our new partner, WZZM TV13, and USAToday, crude oil prices and gas futures rallied sharply on fears that U.S. military intervention in Syria's civil war would disrupt Middle East supplies.
Benchmark Brent crude surged 3.3% to a six-month high of $114.35 a barrel Tuesday and was trading at $115.65 early Wednesday, while West Texas Intermediate was trading above $110 a barrel. September gasoline futures climbed 1% to $3.06 a gallon. Typically, wholesale prices are 60 to 75 cents below what consumers pay at the pump.
As I write this, the best gas prices around here are in the $3.49, but that probably won't last long as most stations have pushed their price to as high as $3.80!
Syria isn't a major oil producer - its output is less than 100,000 barrels a day vs. about 400,000 before its civil war started two years ago. But oil prices have been rising since July, when tensions in Egypt began raising concerns over supply through the Suez Canal.
Some industry observers, such as Societe General, suggest rising tensions could cause crude oil to briefly spike to $150 a barrel if the Syrian conflict spills over to major oil producers and causes larger supply disruptions. Crude oil last approached those levels in July 2008.
Experts don't see $150 a barrel oil, given weakening U.S. demand and falling prices of ethanol, which makes up 10% of most domestic motor fuels. They believe $115-$120 a barrel is probably a ceiling for this crude oil rally.
Reality bites, doesn't it. We'll just have to grin, pump, and bear it.