Behind the unexpected run-up in gasoline prices on clarkhoward.com

It's been an ugly picture at the gas pump across the nation -- nothing like a year ago -- but ugly nonetheless. For 6 straight weeks, the price of gas has gone up every single day. In fact, the price of a gallon jumped by a whole dollar in little over a month.

Now, consider this: Inventories of unrefined oil are at near historic highs. Meanwhile, the International Energy Association reports demand is down 2.6 million barrels/day from a year ago.

So if demand for gas is down and supply is up, what gives?

Clark's best guess -- and this is only a guess -- is that investors and institutions are pouring money that they had on the sidelines into the commodities markets. So this something of a spec buyer's run-up we're seeing in price.

The one thing Clark doesn't believe is that we're seeing yet another conspiracy theory play out where Big Oil orchestrates new ways to rip us off at the pump.

The current run-up in price is a temporary cycle in the consumer champ's estimation. Sure, it's been more expensive than he projected before the unofficial start of summer. But Clark does believe the price mania will start to decline after the July 4 holiday weekend.

We'll have to wait and see what happens…

What others are saying

Oil and Obama
Does anyone think that President Obama's inaction and uncertainity does not affect the wiser heads in the oil industry? Nothing happens to protect the people while POTUS sits in the corner writing flowery speeches. And they know it.
By Catmoves @ 06/21/09 12:31:10 AMreport abuse
get the speculators out
When- and only when you fully understand how the flow of capital works then you can make an educated comment, Curt. Speculators provide capital for oil companys to ferret out a finite supply of oil. If the government controlled prices, like in the old Soviet Union days, that leads to shortages. Excessive demand for a finite supply. Any pressure to hold down prices removes the incentive for any investor to put money into an enterprise, (like a retirement fund, for example) and overloads those enterprises already in place. Unfortunately, the supply of dumbness far exceeds demand. Maybe you could pick up a little overtime? (it wont kill ya)
By grant @ 06/15/09 09:25:53 PMreport abuse
Get the speculators out
Oil spiked to $147 when speculators where allowed to enter the oil markets, and it's going to have an impact again. We need to remove people from the oil market that do not have a vested interest in being there.
By Curt @ 06/15/09 04:12:03 PMreport abuse
price at the pump
As the value of our dollar continues to drop, thanks to government spending so will gas prices increase.
By jonathan @ 06/15/09 03:39:03 PMreport abuse
antitrust
Jer's comment:

"If the oil companies really were colluding, it would violate antitrust laws. Some people won't be happy unless they have someone to blame, and the oil companies make a ripe target."

The oil companies, or more accurately the oil producers, collude on a regular basis, what do you think they're talking about during those OPEC meetings, baseball?

Unfortunately, US laws regarding collusion and manipulation don't apply to other countries.

Domestic oil companies do laugh all the way to the bank every time the producers cut production though. If your profit is based off of a percent of cost, then higher prices mean higher profit.

Don't you wish your business model meant the more expensive your supplies get, the more you make?
By Gabe @ 06/15/09 03:11:15 PMreport abuse
Price at the pumps
Several weeks ago in a speech or press conference, President Obama said that he would like to see gas and oil prices go higher as incentive for automakers to speedup their efforts in developing alternative-fuled options. Surely the commodities investers picked up on that because the rise at the pumps was immediate. However, we're still driving the same cars and no alt-fuel vehicles are cost effective to initiate a surge to purchase them. The commodities drive these prices; supply and demand has nothing to do with it!
By RitaB @ 06/15/09 02:25:15 PMreport abuse
It still supply and demand!
It is still a matter of supply and demand. What has changed is that the supply curve and demand curve have shifted. You can't expect the curves to be in the same positions as last year.

If the oil companies really were colluding, it would violate antitrust laws. Some people won't be happy unless they have someone to blame, and the oil companies make a ripe target.
By Jer @ 06/15/09 01:57:29 PMreport abuse
gas prices
they know school is out and it's vacation time . that is why they are giving it to us
By paul @ 06/15/09 01:10:56 PMreport abuse
It's inflation
Because of out-of-control government spending (which shifts more and more of our economy towards government boondoggles instead of private goods and services) and the printing of literally trillions of dollars in the name of "stimulus", our dollars are becoming worthless.
By John the Econ @ 06/15/09 12:50:27 PMreport abuse
Oil=greed
Oil companies openly admit they do what the market will bear. They are not interested in the lowly wage earner or the American citizen losing their homes,medical insurance or going to a shelter due to a job loss. They tell you this straight away.They drive the commodities market by re-investing in themselves via speculations and play with money.Initially, speculators were the problem and are the problem and may continue to be the problem.Saudi Arabia is not the problem-they see the the writing on the wall. Eventually, in the not too distant future there will be a severely diminished market for oil & gas. The majority of wise folks will not invest in a gas guzzler-which with the help of the oil industry will destroy the automobile market, leaving them with nothing but white elephants in the lots. The Saudis warned OPEC not to raise the prices. Unless they find a big market for sand..oil is on its way to being a dinosaur, taking oil producing countries economies along with them. So put it to the speculators who are helping kill our economy and care nothing for our country and our people. Let them know that we are aware of what they are doing to hurt the nation..tell them we know you are making your money NOW because you see the day you will be out of the oil business. Don't blame Obama for what the oil industry/speculators is doing. Rather, wise up, buy a car that is largely oil/gas free! Don't be shy-tell them like it is.
By Mary @ 06/15/09 12:39:57 PMreport abuse
Its all about the $$
I love Clark Howard but believe it is the Oil Industry that is ripping us off again. He needs to re-think this. I don't know anyone that is not affected by the oil, mortgages, cars, food, etc. We need to add Oil Companies to the growing list of those we American's are "paying" to keep in business so they can continue to drive us to the poor house: Insurance Companies, Banks and Mortgage Companies, Transportation Manufacturers and the Food Industy. How much more are we going to have to bear? I have already lost most of my retirement investments - what's next???
By Paula @ 06/15/09 12:30:59 PMreport abuse
Never mind gas
What about the price of oil by the quart? The price went up when crude was near $150 per barrel...and never came down. The cheapest oil in Walmart is about $2.30 a qt. and two years ago, it was .89 cents. There have been huge profits made on this. Stockpiles are high,crude is relatively low...this is market manipulation...pure and simple. Obama needs all the gas tax he can highjack....and "u ain't seen nothin yet".
By rh @ 06/11/09 07:52:35 AMreport abuse
I think that the Saudis are reading my blog and know that I'm headed up to Maine if a week and are raising the price of oil to make it more painful at the pump. I can't take public transportation, can't starve my kids, can't keep them home from camp and other activities. Gosh, if I had known they were going to raise prices right after Memorial Day I would go on vacation in January.

(sarcasm off)
By kat @ 06/11/09 07:12:10 AMreport abuse
Amish?
The person that said the Amish don't care what the price is, obviously has no clue. They utilize modern transportation to a large extent. While they may not drive, they hire people to transport them and pay for the gas.
By Joe @ 06/10/09 10:10:17 PMreport abuse
Oil Conspiracy - A Joke
I can't believe all of the people complaining about the price of gas and oil. Weren't you alive last summer when gas approached $5 a gallon?? What never-neverland are you living in if you think gas was going to stay at $1.35 per gallon?? If you didn't use this time to shore up your savings, pay off debts, get rid of a gas guzzler, and buy some oil stocks - then shame on you! Government, oil companies and Clark Howard are NOT responsible for you, only YOU are responsible for you! Oil terrorists - give me a break! The Amish don't care what the price of gas is. If you don't like the price - then teach the oil companies a lesson and REFUSE to buy it!
By J.J. @ 06/10/09 09:18:56 PMreport abuse
oil prices!
Hey Clark you try "political correctness" and don't want to say it " like it is." The fact of the matter is that big oil companies are making huge profits as a result of high gas prices.They "reinvest" and buy "commodities" and keep the prices up to keep raking in big profits as they did for many years. Maybe that's not "speculation" per se is just a form of it! Whatever you want to call it is just another manipulation of the market by the big business, big oil industries who continue to ripp-off the people under the "watchfull eyes" of our democratically elected officials!
By Mario @ 06/10/09 08:48:17 PMreport abuse
Oil
Now that oil and gas are going back up, food prices will rise again even though they did not drop from the last run up. All the gov't is doing is killing the middle class.
By Doug @ 06/10/09 04:21:44 PMreport abuse
the problem with our economy
I think oil prices caused our economy to collapse. The people with money don't seem to understand how oil going up devastates the little guy. They think its a joke and it doesnt hurt them. I dont think our economy can handle another hit by high oil prices.
By jimmy rogers @ 06/10/09 03:50:56 PMreport abuse
GAS
The way the oil prices went up last year is a form of terrorism. It has crippled everyone. This recession/depression is from the oil companies that ripped off the American people among CEO'S Everyone from the elderly to the truck drivers have been effected by the oil terrorist. The oil terrorist should be punished to the fullest extent of the law for ruining America.
By JAY @ 06/10/09 03:42:08 PMreport abuse
It's all about commodities
It's all about speculators driving the price up and last call for profits from big oil. Ride the train, buy some commodities or mutual funds and grow along with the trend.
By TwoSox @ 06/10/09 12:57:57 PMreport abuse
Oil supplies are at very good levels. But the refiners know to control the final product and enhance profits for the summer vacation. Oil is a monopoly and they control all aspects of the industry. They can do what they like. Regardless of price I have to drive to work everyday. They have me on a rope.
By Bill @ 06/10/09 12:01:39 PMreport abuse
Id have to agree that speculation is the main culprit this time. Speculation is nothing but a dirty, almost underground business and I fail to understand what purpose it serves. Funny how everyone was blaming Bush for the run up last year and now that Obama is in office, we haven't heard much of a peep out of the media on this subject.
By mjd @ 06/10/09 10:15:32 AMreport abuse
refinery
http://tonto.eia.doe.gov/dnav/pet/hist/MGFSTUS1m.htm
maybe because they refine less gas above is a link to dept of energy Stocks of Finished Motor Gasoline for 20 plus years... over supply of oil but less supply of gas means higher price if you want a profit.
By jp @ 06/09/09 09:53:48 PMreport abuse

Oil and Obama

Does anyone think that President Obama's inaction and uncertainity does not affect the wiser heads in the oil industry? Nothing happens to protect the people while POTUS sits in the corner writing flowery speeches. And they know it.

By Catmoves @ 06/21/09 12:31:10 AMreport abuse

get the speculators out

When- and only when you fully understand how the flow of capital works then you can make an educated comment, Curt. Speculators provide capital for oil companys to ferret out a finite supply of oil. If the government controlled prices, like in the old Soviet Union days, that leads to shortages. Excessive demand for a finite supply. Any pressure to hold down prices removes the incentive for any investor to put money into an enterprise, (like a retirement fund, for example) and overloads those enterprises already in place. Unfortunately, the supply of dumbness far exceeds demand. Maybe you could pick up a little overtime? (it wont kill ya)

By grant @ 06/15/09 09:25:53 PMreport abuse

Get the speculators out

Oil spiked to $147 when speculators where allowed to enter the oil markets, and it's going to have an impact again. We need to remove people from the oil market that do not have a vested interest in being there.

By Curt @ 06/15/09 04:12:03 PMreport abuse

price at the pump

As the value of our dollar continues to drop, thanks to government spending so will gas prices increase.

By jonathan @ 06/15/09 03:39:03 PMreport abuse

antitrust

Jer's comment:

"If the oil companies really were colluding, it would violate antitrust laws. Some people won't be happy unless they have someone to blame, and the oil companies make a ripe target."

The oil companies, or more accurately the oil producers, collude on a regular basis, what do you think they're talking about during those OPEC meetings, baseball?

Unfortunately, US laws regarding collusion and manipulation don't apply to other countries.

Domestic oil companies do laugh all the way to the bank every time the producers cut production though. If your profit is based off of a percent of cost, then higher prices mean higher profit.

Don't you wish your business model meant the more expensive your supplies get, the more you make?

By Gabe @ 06/15/09 03:11:15 PMreport abuse

Price at the pumps

Several weeks ago in a speech or press conference, President Obama said that he would like to see gas and oil prices go higher as incentive for automakers to speedup their efforts in developing alternative-fuled options. Surely the commodities investers picked up on that because the rise at the pumps was immediate. However, we're still driving the same cars and no alt-fuel vehicles are cost effective to initiate a surge to purchase them. The commodities drive these prices; supply and demand has nothing to do with it!

By RitaB @ 06/15/09 02:25:15 PMreport abuse

It still supply and demand!

It is still a matter of supply and demand. What has changed is that the supply curve and demand curve have shifted. You can't expect the curves to be in the same positions as last year.

If the oil companies really were colluding, it would violate antitrust laws. Some people won't be happy unless they have someone to blame, and the oil companies make a ripe target.

By Jer @ 06/15/09 01:57:29 PMreport abuse

gas prices

they know school is out and it's vacation time . that is why they are giving it to us

By paul @ 06/15/09 01:10:56 PMreport abuse

It's inflation

Because of out-of-control government spending (which shifts more and more of our economy towards government boondoggles instead of private goods and services) and the printing of literally trillions of dollars in the name of "stimulus", our dollars are becoming worthless.

By John the Econ @ 06/15/09 12:50:27 PMreport abuse

Oil=greed

Oil companies openly admit they do what the market will bear. They are not interested in the lowly wage earner or the American citizen losing their homes,medical insurance or going to a shelter due to a job loss. They tell you this straight away.They drive the commodities market by re-investing in themselves via speculations and play with money.Initially, speculators were the problem and are the problem and may continue to be the problem.Saudi Arabia is not the problem-they see the the writing on the wall. Eventually, in the not too distant future there will be a severely diminished market for oil & gas. The majority of wise folks will not invest in a gas guzzler-which with the help of the oil industry will destroy the automobile market, leaving them with nothing but white elephants in the lots. The Saudis warned OPEC not to raise the prices. Unless they find a big market for sand..oil is on its way to being a dinosaur, taking oil producing countries economies along with them. So put it to the speculators who are helping kill our economy and care nothing for our country and our people. Let them know that we are aware of what they are doing to hurt the nation..tell them we know you are making your money NOW because you see the day you will be out of the oil business. Don't blame Obama for what the oil industry/speculators is doing. Rather, wise up, buy a car that is largely oil/gas free! Don't be shy-tell them like it is.

By Mary @ 06/15/09 12:39:57 PMreport abuse

Its all about the $$

I love Clark Howard but believe it is the Oil Industry that is ripping us off again. He needs to re-think this. I don't know anyone that is not affected by the oil, mortgages, cars, food, etc. We need to add Oil Companies to the growing list of those we American's are "paying" to keep in business so they can continue to drive us to the poor house: Insurance Companies, Banks and Mortgage Companies, Transportation Manufacturers and the Food Industy. How much more are we going to have to bear? I have already lost most of my retirement investments - what's next???

By Paula @ 06/15/09 12:30:59 PMreport abuse

Never mind gas

What about the price of oil by the quart? The price went up when crude was near $150 per barrel...and never came down. The cheapest oil in Walmart is about $2.30 a qt. and two years ago, it was .89 cents. There have been huge profits made on this. Stockpiles are high,crude is relatively low...this is market manipulation...pure and simple. Obama needs all the gas tax he can highjack....and "u ain't seen nothin yet".

By rh @ 06/11/09 07:52:35 AMreport abuse

I think that the Saudis are reading my blog and know that I'm headed up to Maine if a week and are raising the price of oil to make it more painful at the pump. I can't take public transportation, can't starve my kids, can't keep them home from camp and other activities. Gosh, if I had known they were going to raise prices right after Memorial Day I would go on vacation in January.

(sarcasm off)

By kat @ 06/11/09 07:12:10 AMreport abuse

Amish?

The person that said the Amish don't care what the price is, obviously has no clue. They utilize modern transportation to a large extent. While they may not drive, they hire people to transport them and pay for the gas.

By Joe @ 06/10/09 10:10:17 PMreport abuse

Oil Conspiracy - A Joke

I can't believe all of the people complaining about the price of gas and oil. Weren't you alive last summer when gas approached $5 a gallon?? What never-neverland are you living in if you think gas was going to stay at $1.35 per gallon?? If you didn't use this time to shore up your savings, pay off debts, get rid of a gas guzzler, and buy some oil stocks - then shame on you! Government, oil companies and Clark Howard are NOT responsible for you, only YOU are responsible for you! Oil terrorists - give me a break! The Amish don't care what the price of gas is. If you don't like the price - then teach the oil companies a lesson and REFUSE to buy it!

By J.J. @ 06/10/09 09:18:56 PMreport abuse

oil prices!

Hey Clark you try "political correctness" and don't want to say it " like it is." The fact of the matter is that big oil companies are making huge profits as a result of high gas prices.They "reinvest" and buy "commodities" and keep the prices up to keep raking in big profits as they did for many years. Maybe that's not "speculation" per se is just a form of it! Whatever you want to call it is just another manipulation of the market by the big business, big oil industries who continue to ripp-off the people under the "watchfull eyes" of our democratically elected officials!

By Mario @ 06/10/09 08:48:17 PMreport abuse

Oil

Now that oil and gas are going back up, food prices will rise again even though they did not drop from the last run up. All the gov't is doing is killing the middle class.

By Doug @ 06/10/09 04:21:44 PMreport abuse

the problem with our economy

I think oil prices caused our economy to collapse. The people with money don't seem to understand how oil going up devastates the little guy. They think its a joke and it doesnt hurt them. I dont think our economy can handle another hit by high oil prices.

By jimmy rogers @ 06/10/09 03:50:56 PMreport abuse

GAS

The way the oil prices went up last year is a form of terrorism. It has crippled everyone. This recession/depression is from the oil companies that ripped off the American people among CEO'S Everyone from the elderly to the truck drivers have been effected by the oil terrorist. The oil terrorist should be punished to the fullest extent of the law for ruining America.

By JAY @ 06/10/09 03:42:08 PMreport abuse

It's all about commodities

It's all about speculators driving the price up and last call for profits from big oil. Ride the train, buy some commodities or mutual funds and grow along with the trend.

By TwoSox @ 06/10/09 12:57:57 PMreport abuse

Oil supplies are at very good levels. But the refiners know to control the final product and enhance profits for the summer vacation. Oil is a monopoly and they control all aspects of the industry. They can do what they like. Regardless of price I have to drive to work everyday. They have me on a rope.

By Bill @ 06/10/09 12:01:39 PMreport abuse

Id have to agree that speculation is the main culprit this time. Speculation is nothing but a dirty, almost underground business and I fail to understand what purpose it serves. Funny how everyone was blaming Bush for the run up last year and now that Obama is in office, we haven't heard much of a peep out of the media on this subject.

By mjd @ 06/10/09 10:15:32 AMreport abuse

refinery

http://tonto.eia.doe.gov/dnav/pet/hist/MGFSTUS1m.htm
maybe because they refine less gas above is a link to dept of energy Stocks of Finished Motor Gasoline for 20 plus years... over supply of oil but less supply of gas means higher price if you want a profit.

By jp @ 06/09/09 09:53:48 PMreport abuse

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Jun 09, 2009 -- Behind the unexpected run-up in gasoline prices

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What others are saying