Speculation continues to fuel rising gas prices

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by MORGAN CHESKY / KVUE News

kvue.com

Posted on April 25, 2011 at 5:59 PM

Updated Tuesday, Apr 26 at 9:44 AM

 

AUSTIN, TX - When major oil players report their first quarter earnings this week, get ready to see some big numbers. Chevron and Conoco Phillips are expected to post gains in the hundreds of millions, while Exxon Mobil's profits are expected to rise by more than 50 percent.

Now with oil staying above $100 a barrel, experts say gas prices have nowhere to go but up.

"There's nothing I can do about it," Brandon Moore said. "Got to take it as it goes."

For Moore, the worst part is not the prices but the process.

"It's not really what supply and demand is. It's what people are betting on it to do on Wall Street is what kind of pisses me off," he said.

On Wall Street they are talking oil. Two thirds of the cost of every gallon of gas is tied to it.

"Oil is a commodity," said Dan Ronan with AAA. "It is traded on world markets every minute of every day, and that's just a fact of life."

Ronan says this year's price spike is much like 2008's, only it's raising prices higher several weeks earlier.

Experts say the ticker tells the story behind the pain at the pump. With every new report of tension in the Middle East comes increased speculation giving customers a costly consequence.

"I could fill up my whole tank with $15 when I first started driving. Now it's like 35 to 40 bucks."

The lack of stability abroad is already causing drivers to change their habits. AAA reports a two percent drop in fuel consumption from last year. Now as drivers change their ways, so must gas station owners, including Mohammed Lalani.

"Less people...then less traffic, then less business. It's as simple as that," he said.

The profit Lalani relies on does not come from his pumps but the drinks and snacks inside.

"Just have to cross your fingers and hope for the best right?" he said.

But the best may be a long way down the road. Prices are still ahead of the gas price crunch back in 2008. AAA says the past few weeks the price per gallon has risen at a slower rate than before. For many the light at the end of the tunnel will not come until the end of the peak travel season, which lasts through mid July.

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