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Gasoline Guessing Game - KTBS.com - Shreveport, LA News, Weather and Sports

Gasoline Guessing Game

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Northwest Louisiana -

At $106.00 a barrel U.S. oil prices have jumped to it's highest level in over a year and that means rising gas prices. Have tensions in the Middle East put traders on edge or has the demand for more fuel in the summertime making it painful at the pump?  Traditionally summertime is a time to travel and a critical factor in the cost of those family vacations or that trip to grandma's house is the price of gasoline. But for this year there has been a some relief in the cost for gas to make it to that destination. "We are still below last year's high prices, but we're kind a inching upwards probably from oh say a month ago even two weeks ago we're up about $.05 cents," said Dr. David Hoaas, Economics Professor at Centenary. According to Triple-A, the national average for gas today is $3.63 per gallon, which is $.30 cents lower than a year ago. Ragan Dickens, Communications Director for Louisiana Oil and Gas Association for Northwest Louisiana says a major contributor to lower gas prices may be an increase in domestic supplies. That's due in part to horizontal drilling and hydraulic fracturing, the same techniques used in natural gas extraction are now being used for oil exploration across the nation.
"Now over 90-percent of the wells drilled in the us are using this hydraulic fracturing technique, and that include natural gas as well as crude oil," Dickens said. But Dr. Hoaas says what drives the cost of gas prices to go up and down is a simple equation, supply and demand. "At a minimum we have two things on the demand side driving up the price, we have one thing or a minimum one thing on the supply side" Dr. Hoaas said. He believes the economic recovery that the country is experiencing has put more dollars into the pockets of  consumers and more profits into the tanks of suppliers. Hoaas says, "It's obviously upward pressure on prices because more people want gasoline but also we probably have cooperate America that selling us the gasoline taking advantage of that increase demand to raise their prices and to make sure their profits come in at where they want them to be for the year." Dickens says this is one side of the equation. He believes the political storms in the Middle East, the turmoil in Egypt for instance, eventually will cause some unrest at the pumps. He says another big hurricane also will eventually cause a surge for gas prices to rise. "Last year saw Super Storm Sandy had swept through and there were a couple of major refineries on the east coast shut down this is going to through a true kink in the supply and demand chain. Also there was a planned shut down in the Gulf of Mexico at the same time, so naturally we prices go up a little bit when the supply and demand chain is off a bit," Dickens said. The Environmental Protection Agency also has a hand in regulating. "In the summer warmer months they require a different blend of fuel. This changes the gasoline prices for the summer to be a little pricier that's why when it becomes vacation time you're going to see that price escalate a little bit," Dickens said. And Dickens believes The less we become dependent on foreign resources the more dependent on what's standing underneath our feet like the gas from the Haynesville Shale, or the Bakken in North Dakota, or the Permian in West Texas, the more we become dependent on US based fuels the greater relief we're going to have at the pump.

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