Our Northwest

High gas prices tied to speculation, not supply

Friday, June 27, 2014by  Jon Osterberg

You’re paying more at the gas pump right now because of fear, not lack of supply.
   That’s the key message in a Bellingham Herald article that quotes AAA, OPEC, and oil consultants.
   Gasoline prices typically surge through Memorial Day, then ebb by mid-June once summer-blend inventories ramp up. But this year, financial speculators are bidding up oil prices by about $4 per barrel because of unrest in Iraq, which is now the No. 2 producer of oil among OPEC countries.
   The Islamic State of Iraq and Syria (ISIS) captured Mosul on June 10, then Fallujah. If Iraq crumbles, financial traders worry that Saudi Arabia and Iran would join a messy Middle East conflict that hampers oil supplies.
   Shiite Muslims control southern Iraq, site of its major oil fields. Sunni Muslims supportive of ISIS dominate much of central and northern Iraq. The two have been at odds off and on for centuries.
   OPEC’s secretary stressed that Iraq has plenty of oil and that recent price hikes stem from speculators’ fears.
   As of June 26, AAA’s Daily Fuel Gauge Report says a gallon of Seattle-area regular costs $4.05, with Portland at $3.96 and Spokane at $3.78.

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