Worries Boost Gasoline Prices and Stir Up US Politics

March 28, 2012

World oil prices have risen sharply over the past six months, annoying consumers and hampering economic growth. In the United States, rising gasoline prices have become a political issue in the presidential campaign. U.S. experts suggest many ways to ease prices, from tapping emergency reserves, to placing more limits on market speculation.

U.S. gasoline prices are rising to a level that angers many motorists.

American Petroleum Institute chief economist John Felmy blames rising gasoline prices on rising demand for oil by major emerging nations.

"There is no question that the developing countries use more oil than the developed countries now, and all the forecasts are for that to grow," said Felmy.

Changing fuel prices prompt big energy users such as airlines to purchase contracts that give them the right to buy fuel at a certain price at a certain date, making future costs more certain. But other investors buy and sell these futures contracts in search of profits, with no intention of taking delivery of the oil.

Critics like Mark Cooper of the Consumer Federation of America call these investors speculators and say when they pour money into a market, they hurt consumers by boosting demand.

"Speculation has driven up the price of oil very substantially from $70 to over $100," said Cooper.