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It's still summer, but gas prices haven't spiked

A taxi driver refuels at a BP gas station, one of the few remaining gas stations left in lower Manhattan. 

It’s peak driving season, yet increased demand is not pushing up gas prices. The national average sits at $3.44 a gallon, a six-week low. How does that happen?

Well, first, consider global prices. The international Brent price of crude is at a soft $102 per barrel.

That may sound odd, given global instability in the Middle East and Ukraine. Despite geopolitical events, though, oil continues to flow from those places. 

“There will be no sanctions against Russian oil or gas exports,” says consultant Bob McNally at the Rapidan Group. “So that initial fear we saw in March and May has kind of come out of the market.”

Elsewhere, there have been supply hiccups. The International Energy Agency reports disruptions in Iraq and Libya. Those shortfalls have been made up, however, by increased North American output.

U.S. production, now 8.5 million barrels per day, is at its highest since 1987.

“We’ve had this dramatic increase in crude oil production because of new technology,” says economist Tancred Lidderdale of the federal Energy Information Agency. “And that’s helped offset supply disruptions across the world.”  

Of course, calm markets always precede something. AAA notes hurricane season is approaching, which is always a risk for Gulf coast refineries.


Los Angeles Gas Prices provided by GasBuddy.com
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Los Angeles Gas Prices provided by GasBuddy.com
Click here to add this map to your website.

It’s peak driving season, yet increased demand is not pushing up gas prices.

 

The national average currently sits at $3.44 a gallon. That’s a six-week low. As to why, consider global prices. The international Brent price of crude is at a soft $102 per barrel.

 

Which may sound odd, given global instability in the Middle East and Ukraine. Despite geopolitical events, though, oil continues to flow from those places.

 

“There will be no sanctions against Russian oil or gas exports,” says consultant Bob McNally at the Rapidan Group. “So that initial fear we saw in March and May has kind of come out of the market.”

 

Elsewhere, there have been supply hiccups. The International Energy Agency reports disruptions in Iraq and Libya. Those shortfalls have been made up, however, by increased North American output. U.S. production, now 8.5 million barrels per day, is at its highest since 1987.

 

“We’ve had this dramatic increase in crude oil production because of new technology,” says economist Tancred Lidderdale of the federal Energy Information Agency. “And that’s helped offset supply disruptions across the world.”  

 

Of course, calm markets always precede something. AAA notes hurricane season is approaching, which is always a risk for Gulf coast refineries.

  

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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