Take a drive around town and you will notice that gas prices are up once again. Previously we had written how the price at the pump had dropped and we speculated how long it would last. Well we now have our answer – On February 23rd oil prices hit a 9 month high and the price at the pump has crept back up towards $4.00 a gallon for regular.
The Northeast has been spared a cold winter, which means less heating oil used to heat houses. One would think that would mean less money spent on oil, but not so fast. True, the Northeast has been filling up the oil tank less; however, with oil prices being so high the savings for many have been marginal.
A gallon of regular gas has already topped $4.00 in California, Hawaii and Alaska. AAA reports that the national average for a gallon of regular gas is hovering around
$3.61 $3.76, and some analysts think the United States could see the national average hit $4.25 by April. Take note, those analysts’ predictions are the national average meaning some states will be well above that price especially in states already feeling the $4.00 pains at the pump.
It is no surprise that the troubles between the West and the Middle East are to blame for the increased fuel prices. Tensions in Iran are escalating resulting in Iran cutting oil supplies to Britain and France. In addition to cutting off oil supply, Iran has also has threatened to close the Strait of Hormuz, a waterway in the Persian Gulf through which one-sixth of the world’s seaborne oil exports flow every single day.
The US does not buy any oil from Iran. However, even with the US not getting the oil directly from Iran, the US is so interconnected in and reliant on the global oil market, that really any negative action from any oil producing nation has a negative effect on the US.
In retaliation to the numerous threats from Iran, the US and some European states are imposing sanction against Iran, and there is talk of a full on oil embargo to be initiated this summer – this is seen as a necessary step to quell the Iranian nuclear issues, however it also means problems in the oil market.
Also adding to the soaring oil prices is the fact that the value of the dollar has fallen against the value of the Euro and Asian currencies. For better or worse, oil is priced in US currency, the US dollar, and the price of oil rises as the value of the US dollar falls; and this in turn makes crude oil cheaper for investors using foreign currency. Once again, this is a great example of how America’s involvement with oil seems to help out everyone except the good ol USA.
Image: Pixel 4 Images via Shutterstock
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison