LSU energy expert probes gas prices

Gasoline prices have risen significantly since the first of the year — even though U.S. crude inventories are almost at a 20-year high and demand is lower than it has been in a decade. A spike of more than 70% in the price of oil since the middle of January is reflected in higher pump prices here and around the country. What gives? David Dismukes, associate director of the LSU Center for Energy Studies, says crude has risen because of the devaluation of the U.S. dollar. And while speculators are coming under scrutiny in some quarters, Dismukes doubts they’re driving the oil market, though they’re certainly affecting it. With predictions of $70-a-barrel oil this summer compared to the $60 range this week, Dismukes says it’s not surprising speculators would be attracted. If enough speculators do that, prices go up. Add to that the fact that the nation’s gasoline surplus went from the upper end of the five-year average to the lower end of the five-year average in just a few weeks. It all adds up to an extremely volatile market, Dismukes says. “Really you can get such big surges and swing in demand. It’s just very interesting,” he says. “That’s the scary thing: Demand can be so high and so fast it can blow a long position.” — Steve Clark