As Americans gear up for summer vacation season, a watchful eye is cast toward the infamous gas pump and its ever-rising price per gallon. Those headed for a sun-filled week at the beach or relaxing mountain escape will likely budget more and more cash to get the family to its chosen pleasure-packed destination as gas prices continue to steadily rise.
Many factors contribute to near-record highs at the pump. The Energy Information Administration (EIA) reports that continued international-political tensions amplify the effects of already rigid international petroleum markets. Fuel prices are often influenced by tension in oil-producing regions such as the Middle East, Latin America, and West Africa. Crude oil prices could spike sharply in the course of one trading day on the New York Mercantile Exchange should places such as Iran, Nigeria, or Venezuela threaten to stop supply.
Construction of new refineries in the United States has been halted for thirty years with the last refinery built in Louisiana in 1976. Delays in both scheduled and unscheduled refinery maintenance programs also contribute to gas prices lingering near record prices. Because of depleted U.S. refinery production, the country must import more and more finished gasoline from abroad with American motorists picking up the tab.
The EIA strongly suggests, however, that the increase in the cost of crude oil is the chief reason for the brusque increase in gasoline prices over the last several years. According to the EIA’s Short-Term Energy and Summer Fuels Outlook, “Any real or potential disturbance to petroleum demand or supplies such as unusual weather, unscheduled refinery disruptions, or geopolitical uncertainty in oil-exporting regions can all result in large price increases in a short period of time. Prices can fall as rapidly under a different set of circumstances, such as an easing of geopolitical frictions or the onset of unseasonably mild weather.”