Last Updated:August 22 @ 12:34 pm

US gas prices spike

By Jonathan Fahey

NEW YORK (AP) — A surprise surge in gasoline prices is taking some of the fun out of summer.

The national average for a gallon of gas at the pump has climbed to $3.67, a rise of 34 cents since July 1. An increase in crude oil prices and problems with refineries and pipelines in the West Coast and Midwest, including a fire in California, are mostly to blame.

Analysts don't expect gas prices to get as high as they did in April, when 10 states passed $4 a gallon and the U.S. average topped out at $3.94. But this is still unwelcome news in this sluggish economy, since any extra money that goes to fill gas tanks doesn't get spent on movies and dinners out.

The rising prices could also put pressure on President Barack Obama in the heat of his re-election campaign.

When Phil Van Schepen recently went to fill up his dry-cleaning delivery van in Coon Rapids, Minn., he found a Post-it note a driver before him had placed on the pump faulting Obama for high gasoline prices.

"It's a reminder of his energy policies overall, which I don't agree with," said Van Schepen, who buys about 100 gallons a week and finds he is spending about $40 more than he did in early July. Still, he said the Post-it "was a bit much" because the president isn't responsible for gasoline prices.

Analysts and economists agree, saying prices for crude oil and wholesale gasoline are set on financial exchanges around the world based on supply and demand and expectations about how those factors may change.

The price at the pump in the U.S. fell more than 60 cents per gallon during the spring as the global economy slowed and turmoil in the Middle East seemed to subside.

But crude oil is climbing again, rising to $94 a barrel from a low of $78 in late June. Production outages in South Sudan and the North Sea, Western sanctions that have cut the flow of Iranian oil, Iran's threat to block tankers passing through the vital Strait of Hormuz, and fears that the violence in Syria could escalate into a wider regional conflict have driven up oil prices.

Seasonal factors are also sending pump prices higher. Gas usually costs more in the late spring and summer because refiners have to make more expensive blends of gasoline to meet clean air rules and because the summer driving season boosts demand.

In the past few weeks, pipelines serving Wisconsin and Illinois ruptured, refineries were shut down unexpectedly because of equipment problems in Illinois and Indiana, and a blaze broke out at a refinery in Richmond, Calif.

Gasoline prices shot up more than 50 cents in the span of a month in Indiana, Vermont, Illinois, Ohio, Kentucky, Michigan and Wisconsin. And California drivers have seen gas climb 13 cents since the fire Monday. Motorists in many cities there are paying well over $4.

Drivers in 20 states, including the possible White House battleground states of Colorado, Iowa, Nevada, Ohio and Wisconsin, are paying more for gasoline this year than they did last year, and the list will probably soon include Virginia and North Carolina, said Tom Kloza, chief oil analyst at the Oil Price Information Service. The national average a year ago was $3.64.

"If you are paying more than in the past, it does have the potential to hurt the president," Kloza said.

Economists said the price bump probably won't have much of an effect on economic growth, at least not yet. The extra 34 cents a gallon translates to $33 per month for a typical household.

Prices could go higher if Middle East tensions rise, more refinery problems emerge or hurricanes in the Gulf of Mexico force oil drillers or refiners to shut down. The National Oceanic and Atmospheric Administration this week said this could be a more active hurricane season than previously thought.

But analysts say that without those disruptions, gasoline will probably begin dropping after Labor Day as refiners switch to cheaper blends and drivers hit the road less often. That means voters could be going to the polls as prices are falling.

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4 Comments

  1. PATRIOTComment by PATRIOT
    August 11, 2012 @ 7:58 am

    The only thing “welcome” about this spike in gasoline prices is that it will be brought to the attention of Obama this November. Presently, Obama is feeling the heat but think back to what he told us before he was elected. The president stated that he had no problem with $5.00 per gallon gasoline. He also stated that Americans would no longer be able to set their thermostats to 72 degrees whenever thay wanted. In support of his environmental extremist base, he has cut back oil drilling and seriously damaged the coal industry. Obama intends to eventually raise the cost of all energy at the peril of our nation. If this hater of traditional America is re-elected, the average American will feel much more like the average Euopean subject when it comes to energy costs. Moderates and minorities, if you value driving your vehicle and cooling/heating your home at an affordable cost, vote against Obama.

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  2. billwvComment by billwv
    August 11, 2012 @ 8:31 am

    I heard a quote: “The president has nothing to do with gasoline prices.”
    I beg to differ; all his policies are aimed at causing even higher prices and disruption of supply to the degree that we are accustomed to. The Canadian pipeline [Ozero is against it], the offshore drilling [Ozero is against it], drilling in oil rich Alaska [Ozero is against it], new continental and offshore oil exploration [Ozero is against it].
    Just a few; but sufficient to show the anti-energy mentality of Ozero.
    And all the time: Ojerkhead is saying publickly:
    “I am for all of the above.”
    This lame excuse of a POTUS must be voted out.
    He is a menace to free society!

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    • middlegroundComment by middleground
      August 11, 2012 @ 11:05 am

      The scary part is that in one of his Olympic moments he claimed he was working to make the nation energy independent, and I presume his loyal followers believed what he said rather than looking at his and his administration’s actions. The last president to work for energy independence was Gerald Ford and his balanced approach was one of the first things thrown out by President Carter.

      Right now gasoline prices are a political issue and are being kept as low as Obama can get them to be, but after the election don’t be surprised at massive increases because only a month ago BHO said the US used 25% of the World’s oil, but has only 3%. These figures are wildly wrong and do not take into account any of the advances in drilling or recovery that have made the US look like it floats on oil. We have long known we have between 20 and 25% of the World’s coal reserves, but be didn’t have the technology to recover oil and natural gas from tight shales. That has changed in just the last 5 years and yet we have an administration seemingly unaware of these advances.

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    • CarmineComment by Carmine
      August 11, 2012 @ 6:13 pm

      He knows about the advances in technology, he just doesn’t want to put them to use.

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