Gas prices are already up 45 cents per gallon nationally to $3.75 on average, and we’re not even out of the second month of the year yet. What gives?
According to the U.S. Energy Information Administration, trading prices have quite an impact on gas. The Brent crude oil price–the raw price on the international market–has gone up $6, mostly because of speculation. But there are other factors like refineries having outages, crimping supplies to the states, a global increase in demand for petroleum that can also drive up maintenance costs, and low “crack” spreads. That’s just a way of saying that the spread–the margin between the Brent crude price and a refined barrel of oil–was such that investors were actually losing money on their trades. So yeah, they’re using current prices to make up some of their losses.
Mind you, prices have gone up this high even before refineries have switched over to more expensive summer gas blends. The EIA says that signs point to “cracks” easing, which should help prices come down ever-s0-slightly. But the short-term prospects show that gas prices remain volatile.
Automotive.com’s take: Prepare for a long summer. As shown late last year, gas prices don’t have to remain that high. Chances are that we’ll see another $4 or $5 per gallon scare with summer prices. Then, it’ll go down again. Don’t look for gas prices to ever go back down to $2 per gallon again, but also don’t look for them to keep up this astronomical pace forever. Prices may get higher again, but where there’s a peak, there will inevitably be a price trough at some point.
Source: U.S. Energy Information Administration
By Jacob Brown