By Ronald Bailey
A gallon of regular now averages about $3.19 per gallon in the United States. This is up from $2.65 per gallon last February.
There's no mystery as to why gas prices have jumped. It's largely because the price for a barrel of crude has gone up from the 2010 average of about $75 per barrel to hover around $100 per barrel today. Most of the rise is the jittery response of markets to the "Arab Spring" uprisings in Northern Africa and the Middle East.
In 2008, the world saw oil prices rise to $146 per barrel as global spare production capacity tightened to just 1.5 million barrels per day. With the onset of the global recession, spare production capacity increased to over 6 million barrels per day and the price of oil fell briefly below $30 per barrel.
Today, the Energy Information Administration expects that OPEC surplus production capacity will remain above 4 million barrels per day during the next 2 years. Of course, a lot of this spare capacity is in Saudi Arabia. If the Arab Spring blossoms there, plan to spend a bit more at the pump.