Gas prices in 2013 could reach $4 per gallon by end of the summer.
As previously reported by The Inquisitr, gas prices set a record high back in February, rising rapidly for 32 days straight.
Could gas prices be set to do the same now? Gas prices are expected to reach a national average of about $3.70 within days. But some experts believe the national average for gas prices could spike up to $4 per gallon.
Why Are Gas Prices Rising?
The recent events in Egypt caused crude oil prices on the Futures market to spike. Libya oil output has also slowed. These events caused crude oil to shoot up $10 last month and another $5 so far in July. But United States gas prices are also rising because of events inside the United States.
Due to fracking, the US met 89 percent of its own energy needs in March of 2013, leading to the possibility of the US becoming an oil exporter. Due to the lack of pipeline infrastructure, our benchmark crude oil, West Texas intermediate, was essentially being stockpiled in the mid-west. When supply goes up, prices go down. But now that investment opportunity has ended the US oil prices have once again rejoined the levels of the world crude prices.
Gas prices and oil prices essentially are linked. Oil refineries profit on the price spread between the raw oil and gasoline. These oil profit margins are being squeezed by the recent changes in US oil prices, so this means the price of gasoline is likely to rise in order to balance the “crack spread.” But because the Federal government hasn’t allowed the building of a new refinery in years, US oil refineries are having trouble keeping up with the amount of crude oil coming in and much of it has to be refined outside the US.
What do you think should be done to reduce gas prices in the United States?