Gas Price Surge Underscores Need for Increased Energy IndependencePosted by Maeve McKenna on July 16, 2013
In the past week, gas prices have surged upwards of 14 cents across the country to a national average of $3.61 per gallon. Analysts, including Patrick DeHaan of GasBuddy.com, point out that rising tensions in Egypt and the concern over disruption to oil production in the region have caused oil prices to spike here in the United States. It’s time for the U.S. to reduce its dependence on foreign oil and no longer fall victim to volatile spikes brought on by events overseas. This is just one example of how we could benefit from increased energy production here at home. One bill recently passed by the House of Representatives, H.R. 2231, opens up new offshore areas to energy production resulting in lower energy prices and decreased foreign dependence on oil. As H.R. 2231 awaits consideration in the Senate, we must continue to work to increase our energy independence in order to avoid these unpredictable gas spikes in the future.
Gasoline prices surge nationwide
Gasoline prices surged across the country over the last week, jumping especially high in Houston as crude oil prices soared.
The average price for a gallon of regular jumped 12 cents nationally and 14 cents in Houston, according to figures from AAA.
“A lot of it is tied directly to the rising oil price,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. “Crude oil prices are up close to $12 a barrel from where they were a few weeks ago and it’s because of the tremendous change in crude oil prices that retail prices are going up dramatically.”
The price for a gallon of regular gasoline in Houston is now about $3.46, which remains well below the national average of $3.61, according to AAA.
The growth is a dramatic shift from two weeks ago, when prices appeared to be set for a a downward trajectory through the remainder of the summer.
But geopolitical changes, combined with higher use of crude oil by U.S. refineries, have created supply concerns that have pushed up oil prices.
The U.S. Energy Information Administration has reported that crude oil inventories have fallen by 20 million barrels for two consecutive weeks, mainly because of higher refinery usage of oil, DeHaan said.
Crude oil prices have been on the rise, with the price of West Texas Intermediate crude, a benchmark for U.S. oil, near $106 per barrel.
A military coup and unrest in Egypt in recent weeks have added to fears that oil production could be disrupted or affected. Though Egypt has little oil production of its own, it is the home of the Suez Canal, a major oil transit route.
Much of the fears, however, have to do with instability in Egypt affecting other Middle East oil producers and their output, DeHaan said.
“I believe that the fear of Egypt is driving prices higher,” he said. “But I would be apt to say that that probably is an unfounded fear, that production would probably not be impacted by Egypt.”
Analysts did not initially expect a jump in oil prices related to Egypt, since the country is not a major producer of crude, and still view believe the concerns about oil supply are unwarranted.
“I don't believe it’s a credible fear,” DeHaan added. “I believe that the increase in prices is a bit overdone.”
The oil price increases appear to be slowing down, however, he said. A slowdown in oil price increases would keep gas prices from spiking further, he said.