Gas Price To Increase Still
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Recently, Business Week reported that our worries about increasing gas prices are not yet over. On October 17, the report cited that the price for a barrel of crude oil has risen to more than $89. That was the highest mark ever recorded since contracts started trading in the New York Mercantile Exchange.
The reason for the surge analysts say is the increasing demand for petroleum products around the world. With countries like China and India being touted as the fastest growing auto market in the world, they would surely need a lot of gas to power their country’s vehicles. Not only that, other industries in the said countries also consumes oil so we can see that it is not really surprising that the demand for crude oil still increases even with the threat of global warming becoming more and more serious.
Another reason cited by the report is the unstable Middle East countries. Recently, the Turkish government approved sending their troops into Iraq to hunt down Kurdish guerillas. This action has prompted analysts to worry that it might disrupt oil supply in the Middle East. If the action disrupts oil supply, then the demand will definitely be more than the supply. This could lead to higher gas prices not only on the pump but also on the trading floor.
Although the situation has a potential to turn very ugly, there is a chance that the action of the Turkish government will not affect gas prices adversely. The recent increase of crude oil in the world market does not affect gas prices in the country as it should. But oil refiners such as Valero Energy, Chevron, Marathon Oil, and Conoco are suffering. Since they are buying crude oil at a much higher price than before and then sell refined oil with no price increase, their profits continually decline.
