Why Gas Prices Are Surging Despite Fuel Efficiency, Lower Miles Driven, And Gushing Oil Production

Gas prices are up 4.2%, or $0.15 per gallon, this week.

And this has America's drivers confused.

What happened to more fuel efficiency, lower vehicle miles driven, and gushing oil production?

Well, there are three things to consider.

First, gas prices may be up on the week, But the longer-term trend is down. Here's what they've been doing year-over-year for the past five years:

They are down.

Compared with June prices, current prices are only 1.7%, or about $0.07, higher.

Second, U.S. gas prices are tied to Brent crude oil, an international oil benchmark which surged at the beginning of July as unrest escalated in Egypt and Libya, countries in the heart of the most important oil producing region in the world.

While production and shipments hasn't been disrupted materially, the risk has caused energy traders to bid prices higher.

The good news is that things have calmed down a bit there.

Third, a wave of U.S. refinery outages have caused some pressure on supplies.

So prices could stay elevated for a little bit.

But they're not likely to go much higher.