Despite increased domestic production, U.S. gasoline prices have surged in recent months, and it's largely due to factors beyond the nation's control, analysts say.
Gas prices climbed nearly 43 cents per gallon between Feb. 7 and May 2, industry analyst
Trilby Lundberg told The Associated Press.
Given all the hype about the shale boom it may seem counterintuitive that U.S. motorists are paying more at the pump than they were last year. But the problem is largely linked to what's going on around the globe, Francisco Blanch, commodities strategist at Bank of America-Merrill Lynch, told
USA Today.
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"The world's not swimming in crude or gasoline yet," Blanch stated. "Despite all the crude and gasoline production in the U.S., international markets are not tagging along."
Gas prices are linked to the prices of Brent crude, and Blanch explained events such as the Ukraine conflict and spotty supply from the Middle East are keeping crude north of $100 per barrel.
The International Energy Agency notes that both OPEC- and non-OPEC-producing nations are falling short of expectations, and that OPEC is going to have to step up production to meet this year's demand.
A Goldman Sachs research note also addressed the issue of "stable but tight" supply, USA Today reported.
Most developed-economy stockpiles "remain at low levels" due to lower-than-expected output from hotspots like Libya and Iraq, Goldman said.
Given the fundamentals, North America's shale boom has not been enough to insulate U.S. motorists from the feeling the pinch at the pump.
"In the U.S. and Canada, yes, there is a big shale revolution going on . . . but the rest of the world is not producing enough to feed itself. That's why oil prices abroad are elevated and why gasoline, which is pegged to oil prices, are so high," Blanch argued.
"For now, the shale boom may not be helping consumers directly by pushing [gas] prices lower," he noted, adding that the boom is helping the economy with more jobs.
Prices have started to ease a little, falling 3 ½ cents during the past two weeks. Lundberg told the AP she expects prices to fall further, but the decline is likely to come at a moderate pace due to the stubbornness of crude prices.
AAA projects gas prices will continue to fall through Memorial Day weekend, and according to its forecast gas prices should be at or near last year's levels during the holiday.
"However, the margins of decline have been modest in the past week and prices could be slightly higher than a year ago," Mark Jenkins spokesman for AAA-The Auto Club Group, told the
Orlando Business Journal.
If gas prices do come down to last year's levels, the relief could be temporary. According to the Energy Information Administration, from June to August, gas prices could be 3 cents higher than last summer's prices.
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