Will Gas Prices Drop Soon In U.S.?

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While U.S. gas prices hover just under record highs, U.S. oil stocks are now at their highest point in nine years. Can we expect to see a drop in gas prices?

According to CNN, the price of oil is approaching record highs set in August of 2006 as the world's supply of oil continues to lag behind demand. In the U.S. however, oil trades a few dollars below other world markets due to a significant rise in oil reserves.

With oil reserves at a nine-year high, one might wonder why prices are near record highs and more than double the 9-year low of about $1.30 a gallon.

As I understand it, several U.S. refineries are operating below capacity, if at all. Much of that is due to maintenance that is expected to be concluded soon. I doubt, however, that we'll see a drop in gas prices more than 10% even after refineries come back online. The fact is that oil is trading near record highs, and we can expect gas to do the same. When gas was $1.30 a gallon, oil was trading around $30 a barrel.

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