Support for LAist comes from
We Explain L.A.
Stay Connected

Share This

This is an archival story that predates current editorial management.

This archival content was written, edited, and published prior to LAist's acquisition by its current owner, Southern California Public Radio ("SCPR"). Content, such as language choice and subject matter, in archival articles therefore may not align with SCPR's current editorial standards. To learn more about those standards and why we make this distinction, please click here.

News

The Rising Price of Gas Explained

Stories like these are only possible with your help!
You have the power to keep local news strong for the coming months. Your financial support today keeps our reporters ready to meet the needs of our city. Thank you for investing in your community.
5b2bd8734488b3000926b5f3-original.jpg

A gallon of gas in California is averaging $3.63, 35-cents more than the regular joe American, and yesterday, a barrel of oil topped $111 (this time last year, it was $57). But as the San Francisco Chronicle explains, this isn't about supply and demand. Rather, it's the dollar and they break it down:

Oil is traded in dollars. A weak dollar means that foreign investors can buy more oil, which helps drive up the price. And huge institutional investors start buying oil as a safe place to put their money, safer than the dollar or the stock market. "Oil is the new gold," said James Burkhard, director of global oil market analysis at the Cambridge Energy Research Associates consulting firm. "Oil has some intrinsic value, and that value remains even if the dollar depreciates."

For weeks now, oil industry analysts have watched in amazement as oil's price kept climbing, even though government statistics showed that the country had ample supplies of oil and gasoline on hand. Gloomy news about the economy should have pulled oil down, because demand for petroleum usually slumps in a recession. But the bull market barely shrugged.

Up the coast in the Big Sur town of Gorda, "a gallon of unleaded regular costs $5.20," says the LA Times. The unusually high price on the photo to the right is
Support for LAist comes from
explained here and in the comments.