Rising Gas Prices Result Of Conflict In Middle East
KHQ.COM - Recent unrest in the Middle East can be linked to rising gas prices.
Gasoline prices are as high as $3.45 per gallon in California and $3.36 per gallon in New York, the Department of Energy's Energy Information Administration reported.
"The Egypt situation is part of why [gas prices] ramped up." Dauffenbach said. "But, we're just going to have to realize that we're going to be facing higher energy prices in the future."
Prices are linked to more than the cost of filling a car's tank, Dauffenbach said.
"Every $1 increase in the price of gas represents $150 billion of household spending," Dauffenbach said.
In the past, the demand for gasoline has been relatively inelastic until the price reaches $4 per gallon, Dauffenbach said, because the price continues to rise because of pressure of supply and demand.
Patrick DeHaan, senior petroleum analyst for GasBuddy.com, said geopolitical factors, such as the Middle East, contribute to the cost of gas.
"Problems transfer from area to area; in Iran their opposition group is looking at doing what Egypt did — we get oil from Iran," DeHaan said.
DeHaan also said unrest in the Middle East increases prices in oil because a steady flow of oil becomes uncertain.
Contracts also affect gas prices, DeHaan said.
Based on market studies and the season, investors will buy both long- and short-term contracts with the intention of selling them for a large profit down the road, DeHaan said.
As more investors buy these contracts, pressure mounts for the price to rise, DeHaan said.
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