Sudden gasoline price spikes have experts scrambling for explanation

By

Published August 10, 2012

| FoxNews.com

AAA calls it the steepest one-month climb in gas prices since they started keeping track in 2000.

The average price for a gallon of regular unleaded Friday was $3.67, up from last month's $3.38. Diesel's up almost as much.  

For trucker Anthony Bagley, who was topping off his 200-gallon tank Friday at a truck stop in Millersville, Md., the price hike means lost income, lost profits and lost savings.

"Seventy-five gallons so far -- almost 300 bucks," he told Fox News. "Ridiculous. It's killing me. No money in it, it's not worth it."

Asked what the price hike would do to his business,  Bagley said, "Eventually it's going to fold."

Industry analysts say the sudden spike in fuel prices has one root cause.

"It all goes back to the price of crude oil, and that has been ramping up quite a bit. It went from $78 dollars a barrel all the way up to $93, $94 dollars a barrel in the past month or so," says Rayola Dougher of the American Petroleum Institute.

But other factors have contributed to the rising cost of fuel. Drought across the U.S. is reducing corn yields, spiking the price of ethanol. Refining capacity is down, with two plants in the Midwest offline and a third in California damaged by fire. Tensions in the Middle East remain high. And despite new technologies that have opened up vast domestic deposits, many of those areas remain off-limits to drilling -- much to the consternation of conservatives, who lament the Obama administration's reticence to open more federal lands and waters to drilling.

"What the president has control over and what he can do immediately is stop delaying permits and leases, so that way our drillers can start drilling," Rory Cooper of the conservative Heritage Foundation said. "Stop this land grab where 70 percent of our available oil shale in this country is underneath federal land and we can't get to it."

The Obama administration has steadfastly maintained that more domestic oil is being pumped now than at any time in recent memory. And while it has espoused an "all of the above" approach  to feeding the nation's energy needs, it remains hesitant to increase the nation's reliance on fossil fuels.

Drought conditions have encouraged many in the administration's base, especially environmentalists and climatologists, to argue that climate change is indeed happening. NASA scientist and climate activist James Hansen wrote recently in a Washington Post opinion piece, "There is still time to act and avoid a worsening climate, but we are wasting precious time. We can solve the challenge of climate change with a gradually rising fee on carbon collected from fossil fuel companies."

For truckers like Sean Scipel, such a prescription would be hard medicine to swallow.

"The cost of fuel goes up, the cost of what we deliver goes up, because we have to try to cover it," he said. "So then the stores charge more, and then the people are the ones who end up losing out."

URL

http://www.foxnews.com/us/2012/08/10/sudden-gasoline-price-spikes-have-experts-scrambling-for-explanation/