31 days of higher gas prices comes at tough time

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By Emily Jane Fox

NEW YORK (CNNMoney) — Gas prices have risen for 31 days straight, according to AAA.

That means that the average price for a gallon of regular unleaded gasoline has increased nearly 13% over that period to $3.714.

It’s hitting wallets right in the middle of winter, when people are already looking at large home heating bills. And it comes just after many Americans have been hit with smaller paychecks, and are worried about looming budget cuts that could deliver an even deeper blow.

What’s behind the higher prices at the pump? It’s a confluence of factors, from rising crude oil prices, to production cuts and refinery closings.

“Right now, things are tight worldwide,” said Ray Carbone, president of New York commodities trading firm Paramount Options. “Refineries going down, unanticipated maintenance, higher demand … going into driving season.”

Two-thirds of the cost of one gallon of gas comes from the price of crude, which has jumped 10% in the last two months, according to the Energy Information Administration. As the U.S. housing market experiences a resurgence, the jobs picture brightens and consumer spending expands, anticipation of higher oil demand is driving up prices. At the same time, fears have ebbed that there would be a protracted slowdown in China’s economy, which would have dampened global demand for oil.

OPEC, the powerful cartel of petroleum exporting countries, is also believed to have cut production by about 1 million barrels a day in the last few months, partly in response to rising oil production elsewhere, notably the United States.

Adding to that, several refineries are either preparing to, or have already, shut down for maintenance before their annual switch to summer gasoline, which is formulated differently.

For the average American, all this couldn’t be happening at a worse time.

Most of the country’s 160 million workers are taking home less pay each week since the payroll tax cuts expired last month.

The government in 2011 had temporarily lowered the payroll tax rate for the first $113,700 of annual earnings in an effort to keep more cash in the pockets of Americans and provide a boost to the economy.

Now, workers earning the national average salary of $41,000 are receiving about $60 less on every monthly paycheck.

Many Americans are also worried that the the federal aid programs they rely on are on the chopping block. Next month, lawmakers will face off against the so-called “sequester,” which will slash $85 billion from federal agencies over seven months.

By some estimates, up to 1 million jobs will be lost even as millions of federal workers will be furloughed and a bevy of programs and services across the government will be curtailed.

In such a scenario of widespread furloughs and job cuts, gas price will likely have a deeper impact if they continue to rise.

™ & © 2013 Cable News Network, Inc., a Time Warner Company. All rights reserved.


  • Carl J. Morgan

    I find all the excuses to be nonsense, They already make Billions in Profit so I don't want to hear their lies as to the reasons for higher pricing! Too Bad they pad the Government's pockets. Because I believe the GOVT. Could force a price Freeze on them But It will never Happen in this corrupt World!!

  • Griffons 3

    When this happened during the George W. Bush years, even when the reasons were the same as above or similar, it was always," he and Cheney were in bed with big oil and Haliburton." Funny, the whole time during the Obama regime nary a word mentioned about big oil. Nary a word mentioned, period.

  • R.K.J.

    This is bigger than politics. This is another sign that signals doom and gloom for the middle and lower classes. OPEC rules the world by selling to the highest bidder. Right now China is the BMOC with more vehicles coming into service everyday, paid for by us. Our greed and laziness created this mess. Now let us lie in it's cold embrace, while we wish we had planned a little better.

  • meMeMeme

    Look around, the majority of the vehicles on the road are SUV's and trucks. I also find it interesting that crude goes up when the US is about the become the world leader in production.

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