War causes continual rise in gas prices
Gas prices are at about $1.71 per gallon in Logan.
The AAA reported on Tuesday that the national average is $1.72 and will most likely rise through the summer.
The Energy Information Administration reported that last week’s gas prices rose 1.6 cents per gallon and have broken the record that was set in May 2001.
The EIA predicts that next month’s gas prices will increase to $1.76.
So, why are gas prices on the rise?
Cris Lewis, economic professor at USU, said pricing has to do with expectations.
With the expectation of war with Iraq, gas prices are rising, he said.
Price increases generally occur when the world crude-oil market tightens and lowers inventories, refineries perform maintenance procedures, or people go on vacation during the spring and summer seasons, according to http://travel.howstuffworks.com.
The Organization of the Petroleum Exporting Countries is the main distributor of crude-oil inventories and has the biggest effect on gas prices, according to the site.
OPEC is an organization consisting of 11 nations that account for 40 percent of the world’s oil production, according to the EIA.
Iraq is one of those 11 nations.
“Fear of war in Iraq [has] caused crude-oil inventories to drop and costs to soar,” said Jim Baker, vice president of operations for Flying J Travel Plazas.
“A lot of people think retailers are making money on the higher prices, but we are not. The cost for crude oil has increased substantially,” he said.
The region of the country where pumps are located also affects gas prices.
The EIA reported that regular gas prices ranged from a low of $1.61 per gallon along the Gulf Coast to a high of $2.49 per gallon in Northern California.
California, Chicago and Milwaukee are regions that require clean-burning fuel that comes from only certain refineries, according to the EIA. This requires more travel time for the distributors, which means an increase in gas prices.
–lindsey@cc.usu.edu