They’re baaaacccck. Like locusts ravaging fertile crops, gasoline prices are soaring again and eating away at the purchasing power of ordinary Americans. And again, financial speculators appear to be a big part of the story.
The national average pump price hit $3.74 for a gallon of unleaded gasoline Tuesday, up a sharp 44 cents per gallon from just a month ago, according to the AAA Motor Club’s Fuel Gauge Report.
“It’s the 33rd day in a row that we’ve seen a consecutive increase” in gasoline prices, said Nancy White, a spokeswoman for AAA, who said there It’s not all supply or demand.
The rising gasoline prices come even as the United States now produces more than half the oil it consumes. In fact, the nearly 800,000 barrel per day increase in U.S. production output from 2011 to 2012 reflected the largest one-year jump since oil drilling began in 1859.
The U.S. Energy Information Administration projects that U.S. oil production will rise from 6.89 million barrels per day in November 2012 to 8.15 million by December 2014. At the same time, the International Energy Agency has lowered its estimates for global demand for oil. Lacking demand, OPEC, the oil-exporters cartel, has reduced production.
It all argues for lower oil prices, or at least less volatility in the price of oil and thus gasoline. are several explanations but none seem overly convincing.
More than a passing pain, rising gasoline prices act like a tax on consumers, harming the economy by whittling away at the amount of money the consumer can spend on other things. Gasoline expenditures as a percentage of U.S. household income hit three-decade highs in 2012, and the recent spike suggests 2013 might not be much better.