Why Oil is so Vulnerable to Price Spikes

Gas prices have already started an upward trend this year, approaching the $6-level in some areas.

Oil is up again for the 7th day in-a-row!

While some fear that oil production is in the midst of a supply crisis, demand continues to rise so trading prices are rising too.

But that's not the primary reason for the surge in gas prices...

President Barack Obama addressed the situation during a speech at the University of Miami.

The climate in the Middle East is making this worse, he said. Iran is upset about sanctions on its nuclear program, and unrest elsewhere is hurting production.

Obama stressed his energy plan as a solution, although that plan won't have immediate results.

For now, oil companies have the upper-hand and those companies' shareholders will continue to gain. Meanwhile, consumers will simply have to suck-it-up and dish out a little extra dough at the pump.

In what the President is calling his “all-of-the-above” solution, he recommends a continued increase in domestic production to break away from imports as much as possible, an increase in alternative energy, and an increase in fuel efficiency in vehicles.

Michael Levi of the Council on Foreign Relations stressed the importance of numerous long-term solutions:

“There is no silver bullet that deals with the energy challenges we face.”

Domestic solutions are one small step in the right direction, but it's no simple task, especially when outside forces have control over the oil prices.

Bloomberg’s “Off the Charts” video details the price spike:

“When oil production is far from the absolute maximum, the price stays in a very narrow range.  But when the production picks up, oil prices become erratic.”