Two weeks after the U.S. and other 27 allies announced they were tapping domestic oil reserves (which temporarily knocked down the price of oil to almost $90 a barrel) oil is back around $100. And gas prices, which have been declining since May, are up over 4 cents since one week ago.
Oil is rising again as investors bet that the economies of many countries, including the U.S., will improve in the second half of the year, and global demand for petroleum will rise. While most experts agree that the world has plenty of oil, there are concerns that supplies could get tight as demand rises.
Higher oil prices mean higher gas prices. Crude oil costs account for two-thirds to three-quarters of the price of a gallon of gasoline, according to Tupper Hull of the Western States Petroleum Association, a trade association representing oil companies in six western states.
The average price for regular, unleaded gas in the US is currently $3.58 a gallon, according to the AAA Fuel Gauge Report. Gas prices are currently 86 cents higher than one year ago.
Gas prices likely will remain choppy, rising or falling within a 20-cent range for the rest of the summer, according to Oil Price Information Service analyst Tom Kloza. However, they probably won’t push back to near $4 a gallon, where they were in early May, barring floods or hurricanes that could affect refinery operations.