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Gas Prices Rise for First Time Since June

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MARTIN BACCARDAX: It bumped up a penny last night, JD. And that’s the first time it’s done so in 98 days, which is really quite something. We basically snapped the longest streak of daily declines for U.S. gas prices since 2005. They were moving downward for about 14 weeks now, and they bumped up last night again for that first time. Now they’re reasonably cheap on a six month basis, we’re down significantly about 27% from the records that we reached in June, but we’re still 15% higher than we were this time last year. So it’s not exactly cheap to fill up your cars.

We’re seeing a bump higher in oil prices as a result of the rhetoric that we are hearing from Vladimir Putin and the situation that we’re seeing militarily in the Ukraine. But China’s economy is still kind of on its knees at the moment they’re the biggest energy importer and therefore I don’t think anybody is anticipating the crude prices are going to stay at these levels and they’ll probably drift lower into the end of the year. That would be good news for American gas purchases. The second thing, JD, which is really interesting to me. Summer gasoline is different to winter gasoline. The blends that refiners make and sell to the gas stations that we all travel to change as a result of the temperature. And the EPA demands that summer gas, which is more expensive to refine, is sold in order to reduce emissions because of the temperature. When the temperatures get cooler, refiners can produce cheaper gas because that ignites more quickly inside a typical combustion engine. So historically, winter gasoline prices have been cheaper in the summer because of that blend. So the fact that we’re probably going to see demand hold down global crude prices and winter gasoline, which is a little bit cheaper coming through into the stations, I would imagine will actually might get lower on gas between now and the end of the year, irrespective of today’s blip.

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