Though crude oil prices are nearly unchanged from their level last year, gas prices around the country were higher last month than any other January on record. According to AAA, the national retail average price for a gallon of self-serve regular gasoline stands at $3.48, nearly 12% more than 12 months ago.
Unfortunately, analysts are predicting that gas prices are only headed higher and could reach $4 a gallon by the summertime. They cite 4 reasons for this:
1)Tensions are rising in the Middle East as rumors swirl of a possible military strike by Israel on Iran’s nuclear facilities. If this were to happen Iran has promised not only to retaliate but also to block traffic traveling through the Strait of Hormuz, the passageway for a fifth of the world’s oil.
2) In recent years, demand for gasoline has been down due to high prices in crude oil. As oil prices have climbed, refiners have struggled to pass on all of the increased costs to consumers. As a result, refineries have seen very low profits, sometimes even losses, and have been forced to shut some of their facilities. Fewer refiners mean less gasoline in the marketplace, which cause prices to move higher.
3) As the warmer months of the year approach, gasoline prices often rise. One of the reasons for this is that there are more people traveling on family vacations and road trips. Another is the annual springtime maintenance energy companies conduct on their refineries which can cause supply disruptions.
4) Gasoline sold during the summertime is different than that sold in the wintertime. Under the 1995 Reformulated Gasoline Program (RFG), refiners are required to use different fuel additives to produce gasoline, which burns cleaner but costs more money, making gasoline prices higher. The Environmental Protection Agency requires this seasonal gasoline transition because warmer weather increases the levels of smog and ozone.
If the analysts have it right and the price of gas sustains over $4, the economy could face some severe headwinds. The more consumers spend on gas, the less discretionary spending will take place.
What do you think? Where do you think gasoline prices are headed? If prices reach $4 what do you think it will do to the economy? Join the discussion below!
Do you think if we moved forward with the XL Pipeline we could help this issue? It also seems companies are trying to popularize battery operated cars. The less we have to depend on gas, it seems, the better.
In the short term the answer is "no". Even if the pipeline were started today it's still a few years off from completion and having an impact on our economy. That stated, the sooner we start, the better we are.
Battery operated cars have been the future of automobiles for over 100 years now. The problem that scientists have not overcome deals with plain old physics versus economics: they cannot make a battery small enough to fit into a car to take it the same distance that a full tank of gas can take you and make it affordable.
I love the concept of the Chevy Volt (fires notwithstanding). However it has a range of about 35 miles on a single charge for city/suburb driving. That's fine as a commuter car, but won't cut if you're doing anything else. Moreover, the price tag is $40k+: for that I can get a pretty nice entry level luxury car or SUV.
How about INFLATION????…..from the mindless and continuous printing of money by the Obama Admin?????…..Energy is conveniently omitted from the Fed figures on inflation as is Food……
It's the same old song as always just another reason to rape consumers & exploit the energy market.
It's time for the public to nationalize these resources. What will be the reason for the next increase? Farting in the middle east is on the increase. Please we need to hold these companies accountable.
I send copies of my gasoline receipts and home energy biils to the Magna-cum-Moron in the WH. The clown is to stupid and arrogant to care, but maybe we can bury the Dumbass-in-Chief in paper.
They use any excuse to raise prices. If it isn't Iran, they will come up with something else. It seems that the price of oil goes up with no correlation to the actual price of a barrel of oil.
One statement: WHY is the US exporting so much gasoline ????
We'll see gas over $4.00 before spring time. It's already between $3.69 and $3.89 where I am and has been climbing pretty quickly since New Year's.