If you’ve used put gasoline in your tank recently, you’ve noticed the per gallon price steadily rising:
The national average pump price increased nearly 3 cents overnight to $2.391 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline prices ticked higher every day this month.
A good part of the reason for the escalation is seasonal in nature. Pump prices always rise just before the Memorial Day weekend which marks the start of the summer “driving season.”
But there’s more to it than that. Various factors are at play, including recent refinery fires, optimism in the equities markets and the strength of the dollar. A new report from the U.S. Energy Department on Wednesday said crude-oil stockpiles dropped by 2.1 million barrels for the week that ended Friday. One factor keeping prices lower was the glut of oil sitting in storage tanks around the nation. As those supplies get drained down, we should expect to see gasoline above two dollars for quite a while.
With oil above $60 per barrel and climbing, the oil companies are talking about ramping up exploration and production activities again. Once the price moves into the $70 to $80 range, they move beyond just talking and start doing. But they will be looking for and extracting oil in pretty much the same places where they left off when oil prices dropped through the floor.
