When Will Gas Prices Rise?

The pain in the tap continues, seemingly uninterrupted. Gas prices have recently reached the highest recorded levels. The national average for ordinary petrol has reached $ 4.97 a liter according to AAA. This is a sharp increase of 15% from just last month and more than 60% over this period last year.

Prices for diesel, which boosts the truck industry, have now risen sharply — surprisingly 79% in the last 12 months. The cost of shipping daily necessities such as food and clothing has skyrocketed. This is reflected in the exit counter. Target (NYSE: TGT) and Walmart (NYSE: WMT) both highlighted the significant increase in shipping costs in their recent revenue calls.

Pain at the tap translates pain into the pocketbook.

Summer Swelter Should Increase Gas Prices

The season should increase prices even more in the short term, everything is equal. The U.S. The Energy Information Administration (EIA) notes that gas prices tend to rise in late spring and rise in late summer as driving miles reach the top.

Also, environmental laws require the most expensive combination of fuel in the summer during the summer months, although the EPA has withdrawn that this summer cites price hikes. Petrol prices in August were almost 10% higher than gas prices in January for the past two decades. It may be a few difficult months before it seems to relax when the season is over again.

Extremely Dark Before Dawn

The price of oil is the largest component of gas prices. It is calculated over half the total value. Taxes, distribution and refining costs create balance.

Recently, news articles costing $ 200 per barrel of oil or even $ 300 overflowed. This will put gas prices into the stratosphere. An article in the New York Times newspaper – “Oracle Oil Predicts $ 200-a Barrel Crude” – just one example.

Now if you look at this article from the Times, you will see that it actually dates from May 21, 2008. This was the time to keep oil prices close to current levels. Not only did the oil never reach $ 200 per barrel at the time, it never reached even $ 150. Oil prices reached $ 147.27 in July 2008 before falling like a stone. The reason? Demolition of need and additional provision.

High oil prices inevitably lead to low demand, or demand destruction. Eosinophilic (NYSE: COP) CEO Ryan Lance recently addressed the issue. Therefore, higher oil prices are bringing more supply to the market as OPEC opens up a slightly wider spigot. It also makes shale an effective oil production method despite its high production costs. This double-digit rate of low demand and high supply is exactly the opposite of what has pushed oil prices to where they are now – high demand and strong availability.