An Explosive Jump in Gas Prices

Tickers in this article: COP HES
NEW YORK (TheStreet) -- Got a chance to sit down with TheStreet's Jim Cramer and discuss gas prices, now up more than 50 cents in the last month alone. What is causing this unprecedented rise?

Many of the most repeated arguments I hear just don't wash for me, including reduced Saudi supply and a shutting down of East Coast refineries previously owned by Hess (HES) and ConocoPhillips (COP) .

What does make sense to me is the strong increase in speculative positions in gasoline, now at a greater number than at any time in that contract's history, even going back to the major spike in oil prices in 2007.

This is a theme I wrote about extensively in my book "Oil's Endless Bid," now resurrected in the gasoline market. The last time retail gas prices hovered near $4 a gallon, crude prices were $20 higher; the time before that, crude was almost $40 higher than it is selling for now.

This is the clearest indication that speculators have added a strong premium into the price of gasoline even before we go into the demand-hungry summer. Gasoline is a very hot trade right now, akin to shorting the Japanese yen, but far more destructive to the consumer.

Have a look at the video I taped with Jim for more.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Usage of this site is governed by TheStreet's Terms of Use available here. Information collected on this site may be collected by TheStreet and OC Register. TheStreet's use of information collected on this site will be governed by TheStreet's privacy policy available here. OC Register's use of information collected on this site will be governed by OC Register's privacy policy available here. If either TheStreet's or OC Register's privacy policy have provisions that are more restrictive than the provisions of the other party's privacy policy, such more restrictive provisions shall not apply to such other party.

Copyright © 2012 Orange County Register Communications. All Rights Reserved.
Site Help | Site Map