Pipelines and Gasoline Prices

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Perhaps you have heard that British Petroleum is closing the Alaskan pipeline, The Trans-Alaskan pipeline, which goes from Northern Alaska at Pruhoe Bay to Valdez. It supplies us with about 400,000 barrels per day and that is a lot of oil. In fact it is about 2.6% of our total usage in the United States of America.

Due to supply and demand issues we have severe problems when we have shortages while we are running at full capacity. Shortages of this type cause prices to rise as commodity traders understand that the demand is greater than the supply. Almost three quarters of the Trans-Alaskan Pipeline has severe corrosion problems and this is causing leaks and problems and has been for quite a while. The problem now is serious enough to close down the pipeline.

If you go down to your local gas station you'll notice that gasoline is up four cents already on this news of the close pipeline. And just think this has nothing to do with the war between Hezbolla and Israel, Iran's threat to use oil as a weapon or any Atlantic Tropical Hurricane Season Storms. Some traders are considering the inevitable future of $ 80 plus per barrel oil prices in a very short time period.

Suffice it to say that you can expect gasoline prices to stay above three dollars through the entire summer. This will have a chilling effect on the economy and many market sectors, which use lots of gasoline and diesel. This will also take its toll on the American family and curtail personal spending, which will also affect retail and the job market. Since everything affects everything else the closure of this pipeline is not a good thing. Please consider all this in 2006.

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Source by Lance Winslow