Political turmoil, late-season demand drives jump in gas prices
Political turmoil in the Middle East and unseasonably warm weather in the U.S. combined to push the average price for a gallon gas up 8 cents in the last week.
A gallon of unleaded averaged $2.56 on Tuesday morning, compared to $2.48 a week ago. The sharp uptick was driven in part by higher-than-usual demand by drivers taking advantage of warm temperatures, said Jeanette Casselano of AAA.
“As consumers fill up their tanks more frequently, we are seeing supply levels tighten and gas prices increase,” she said.
Political tension in the Middle East has also been a factor as the benchmark price for a barrel of crude reached $57, the highest in more than two years.
Investors are keeping an eye on the situation in Saudi Arabia, where scores of princes, businessmen and government officials were arrested in a anti-corruption crackdown over the weekend. The threat of conflict between Yemen and Iran has also unnerved markets, Hussein Sayed, chief market strategist at trading platform FXTM, told CNN.
“Conflicts within the Middle East are becoming a major influencer on energy markets, and a further surge in [oil] prices will likely be due to political risk,” Sayed said.
Global demand for U.S. stockpiles has put additional upward pressure on price. Crude exports reached 2.1 million barrels a day last week, a new record, which helped reduce inventories in the U.S. to levels 5 percent below a year ago.
Patrick DeHaan, head of petroleum analysis for GasBuddy, said a leak in the Explorer Pipeline, which carries gas and diesel from Houston to Oklahoma, contributed to big price increases in the Midwest and Great Lakes region. Drivers in Michigan saw prices rise 21 cents. Ohio and Illinois also saw increases of about 20 cents a gallon.
The pipeline was back to normal late last week, but the damage to motorists had already been done, DeHaan said.
“Gas prices are likely to moderate in the Great Lakes as some pressure is relieved with the Explorer Pipeline back online,” he said. “But with rising oil prices, much of the rest of the country is likely to see prices continuing to trend higher over the next week.