Christian Science Monitor: What has driven up oil prices
Speculation and a falling dollar may now be as important as supply and demand, analysts say.
Washington - The recipe for record US gasoline prices goes like this: Take a tight oil supply and growing world demand. Add a falling dollar and lots of investment money flowing into oil and other commodities.
Finish with market turbulence caused by the annual switch from winter to summer gasoline blends. The result: an average US retail price for regular of more than $3.60 a gallon.
Will gasoline stay that high? At least through the summer, say experts. At the margin, pump prices may now depend on currency fluctuations and financial speculators as much as on traditional economics.
"The old fundamentals – the balance between demand and supply – still matter, but it is these new factors that are the driving force behind the record high," concludes a recent analysis by Cambridge Energy Research Associates. ...
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