Tuesday, February 17, 2009

Gas, once again, on the rise

Gas is nearing $2 per gallon -- again.

After the horribly high prices to fill up our Hyundai last summer, I didn't think gas would ever decrease in price again. (Yes, we drive a Hyundai. Thankfully, I had left my SUV back in California.) After all, if people (albeit a smaller amount) were willing to shell out over $4 per gallon, why would gas prices ever drop again? Well, then the whole demand issue came in to play, prices came down, we wiped the stress-induced sweat from our brow and happily drove our Hyundai at half the price.

But gas prices have reversed their downward-to-flat course and are now creeping back up toward $2. It always seems like when you least expect it, you're shelling out $40+ dollars at the pump and lamenting about the "good old days" when gas was only $1.50. Now is an even worse time for these lamentations, what with more people laid off than in recent history and struggling to save what little they can from unemployment.

So will the prices continue to climb? This time of year is generally when oil refineries perform maintenance on their plants, so we should take that into account, as they need to cover their costs, but as gas prices are rising, the price of a barrel of crude oil is sinking -- to the recent tune of about $35/barrel. Why the disparity?
"I think what you're seeing now is a backlash of a period, from the end of the summer until the end of the year, when refiners were selling gas into the consumer market at a discount to crude oil," Ben Brockwell, director of data pricing for OPUS, told CNNMoney.

Brockwell said refineries lost money last year, despite the surge in gas prices. The refineries in the latter half of 2008 were paying top dollar for oil, and then producing gasoline in a low-demand economy, he said. Now, refineries are producing less, driving up prices in even this low-demand economy, while stockpiling discount oil, he said.

The good news is that gas prices probably won't rise to the heights they saw last summer, the bad news is those extra few dollars to funnel into your tank will need to be accounted for in your budget. Here's to cleaner energy.


Revanche said...

It was so nice while it lasted. It shot up from 2.00 to 2.25 in about 6 days here in California, which is quite sad. My records show that I was paying $500 for gas in the month of June last year during the worst of the prices; I really hope we're not going to see that again.

Crystal said...

Wow, that's a big jump in just six days! But as a Bay Area native, I know how quickly prices can skyrocket. I don't think they'll go back to where they were last summer...hopefully not anytime soon.

Kit Kat said...

I also read an article about this subject that basically said this:The price that is quoted for the cost of a barrel of oil is based on West Texas oil. That cost has plummeted the most, but there are few pipelines to get it to refineries. The cost of the oil from Canada and the Middle East (where we import most of the oil that makes the gas we put in our cars) has gone back up a bit as they've cut production. The West Texas oil has historically been the most expensive so the price disparity didn't matter. I can't seem to find the original article, but it's interesting to think about.

Anonymous said...

Oil companies have made record profits years after year. Their costs are covered until 3028. Bastards!

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