Experts: Speculation fuels bump in gas prices across nation

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M & H Gas Station on First Avenue South is one of five gas stations in Jamestown advertising regular gas at $3.79 a gallon Thursday.

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Commodity speculation is the main cause of high gasoline prices in Jamestown and around the nation, according to state and national sources.

An informal survey of gas prices around Jamestown Thursday showed most stations were charging about $3.79 a gallon for regular gas. According to the website gasbuddy.com, the average price per gallon for regular fuel in North Dakota is $3.729 — down from $3.738 on Wednesday.

The price Thursday is up 21 percent from a month ago when the average price in North Dakota was $3.077 a gallon.

Gene LaDoucer, AAA North Dakota spokesman, said gas prices typically begin increasing in February each year and top out around Memorial Day.

“A lot of refineries go offline this time of year to perform maintenance and to prepare for mixing the summer fuel blends,” he said. The summer blends are usually more expensive.

This year the price climb started earlier than normal due to more speculation in the oil and gas commodities market, LaDoucer said.

“Speculators are putting more money into oil and gas as they have seen the stock market doing well,” he said.

A higher stock market means a stronger economy, which uses more energy, LaDoucer said.

Patrick DeHaan, senior analyst for gasbuddy.com, said in a story on his blog Tuesday that speculation is what has driven the price up this month. He said gas prices have gone up even as the oil inventories have risen 10 percent since last year.

He based his assessment on comments made by U.S. Commodity Futures Trading Commission member Bart Collins during a speech he made Feb. 13 at Arkansas State University in Jonesboro, Ark. A transcript of the speech is available on the CFTC’s website, www.ctfc.gov.

“Our staff has looked at trading in crude oil and has found that commercials (business that use crude oil products) are a part of only a tiny fraction of the trades that account for price changes. In other words, non-commercials — speculators — are dominating the price discovery process in crude oil,” Collins said in the speech.

LaDoucer said he believes gas prices are close to peak.

“As the price peaks, commodity trading should drop off,” he said.

Sun reporter Chris Olson can be reached at 701-952-8454 or by email at colson@jamestownsun.com

Tags: news, energy, fuel