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Ok, so if you have not noticed gas prices are soaring! :eek:
We got trouble in Venezula that seemed to coincide with rising gas prices. Is this giving the rest of OPEC the freeedom to run amok? Or, perhaps it is Saudi Arabia’s retaliation for the US pulling out of supporting the war in Yemen? Or, is it our eroding relations with Iran? Or, is it all other debacles in the Middle East? Maybe Mercury is in retrograde? :rolleyes: What’s the Straight Dope on this?
In Southern California, it says ‘The price of gas in Southern California has climbed rapidly over the last few weeks as oil refineries across the state experience maintenance problems… The six sites undergoing both planned and unplanned maintenance supply the bulk of refined gas for the state, DeHaan said… Four of the outages — including a fire at one refinery — are in Southern California, which is why the L.A. area is seeing a higher average price than San Francisco, he said.’
In my observation, there are always refinery fires leading into the driving season.
I heard on NPR that it’s because of flooding in the midwest, which is causing an interruption in the ethanol supply chain. Corn-based ethanol is a component of almost all gas sold in the US today. I also know that Saudia Arabia is reducing oil production to drive up prices. Take your pick.
There’s also the change from winter-blend to summer-blend gasoline. And since the change in formulation requires some work to the refinery, it’s logical to shut the entire process down and do the regular maintenance at changeover time.
Is it really skyrocketing? It looks more like it plummeted at the end of 2018 and is now reverting to roughly where it was for about a year before that.
It depends on how you define skyrocketing. In Corpus Christi we’ve gone from prices in the 2.10s and 2.20s and we’re now in the 2.40s. I wouldn’t call it skyrocketing, and it’s nowhere near the crazy high numbers that I remember during W’s second term.
Retail fuel prices are highly region-dependent. The question can be answered factually, but only if you tell us the region in question and let us know what you mean by “soaring”.
Nationally, regular gasoline is cheaper now than it was six months ago and is cheaper than the average (nominal) price over the last ten years.
The Saudis cut their production by 1.3 million bpd since November, Venezuela’s production is way down, Iran has sanctions on it, and Iraq has reduced production. Meanwhile China has been stockpiling oil since the Iran sanctions were announced.
The forecast is for increased prices throughout the year.
However, according to the link I posted above, the national average it has gone up 40 cents in the last 4 months. I don’t know if qualifies as soaring, but it has gone up recently.
I agree without further definition it’s meaningless. Also a lot of the reasons people gave are things related to crude rather than gasoline. If you compare the Gas Buddy chart of AAA average US retail gasoline price over 10 yrs to a chart of WTI* crude price over 10 yrs the shape is similar but not the extent. For example the big crash in prices ca. early 2016 was much deeper for retail gas than the recent low around the end of last year (~$1.70 v ~$2.25). On the crude chart those two valleys are both around ~$40/bbl. Crude is in more of a flattish range since recovery from the 2016 bottom, gasoline has a little more of an uptrend.
Besides all the (often regional) gasoline specific factors to do with mandated gasoline blends, particular refineries’ problems, transport issues, also in some states the gas tax has gone up. That’s a noticeable factor here in NJ comparing today’s to a few year ago gas prices.
Anyway if someone says ‘it’s Venezuela, it’s Saudi cuts’, what does that actually do for you? I sometimes wonder. I guess in the background is always a populist/conspiracy type attitude that somebody is sitting at a console controlling all this, so if you say not, prove it with a convincing explanation!
Another way to look at it is last week’s AAA average was in the 2.80's, which is right on top of the 100 yr inflation adjusted average in 2019 's.
*and you can also argue which is more related to gasoline prices even in the US, WTI or Brent.
Because people have been using those loyalty cards and paying for fuel mostly by Credit Card, the supply of gasoline is rationed in North America and there is no slippage that would force prices down within days. Once you get used to that , then that bullshit supply and demand answer starts to make sense. Now to get the street price of gas, you have to include the vig and the amount of vig you pay is region dependent.
In Ontario, I am seeing 1.14/ litre while in British Columbia they are paying somewhere around 1.60 /liter or about 7 bucks a gallon. Some locations will pay even more depending on how far fuel has to be trucked. I was reading during the afgan war, some american units were paying 700 bucks a litre of diesel, when you factored in that fuel had to be flown to some of those outposts in the mountains to run the jennys.
For your own sanity, I would avoid listening to reasons that you mentioned. Risk determines price and a stable risk will net a lower price than a dynamic risk ratio. Crude oil comes from politically unstable areas mostly, its transported by ships that can sink, through sea lanes that could be battlefields at any moment and finally to a refinery that is shut down for “Maitenance”. All that add up to someone that’s buying oil on the stock market.
Now we get to the part where its refined and going into tanker trucks for your neighborhood, now you have to add the vig so the goverment man can get his cut, since he cant do jack to the supplier, he has to add it to your bill and use words like climate control, doing your part , think of the next generation , blah blah and then you post a question on the dope about why the price is so high.
Skyrocketing? Not really, especially when you consider inflation. In 1961, the cost of gas was .29¢ a gal. Inflation to date (per inflationdata.com) is 748.24% bringing the cost per gal to $2.46 excluding all other factors.
Ok, stop being overly pedantic, folks. According to the site Hermitan linked, the national average price of gasoline has gone up almost 60 cents in the last 3.5 months. That’s more than 25% in that time frame, equating to an annual rate that would roughly double the price if the trend were to continue. It’s not exactly an overstatement to call that “skyrocketing”, considered that way.
Obviously, regional variations do exist. However, the OP was simply asking for a factual answer to the question: why is the national price of gasoline going up so sharply?
There is no “national price”, just an average of local prices. And most local prices are just following oil prices and returning to where they were six months ago before the recent dip. The answer for New York is different from the one for California, where we actually are seeing some unusual activity that isn’t following crude prices. Not that refinery shutdowns are really all that unusual. We don’t even know if the OP is in the US.
I don’t think it’s pedantic to give this vague question somewhat of a hard time. And it would be less so to give the statement “equating to an annual rate that would roughly double the price if the trend were to continue” a hard time when you can see very easily on that graph that the recent increase is just getting back to where the national average price was a few months ago. Based on the change from fall 2018 to early 2019, would it have been reasonable to describe that as ‘a rate of price drop per month that would result in free gasoline within a year if it were to continue, we need a narrative explanation for this!’
Also there could be real value in discussing the issue for particular regions, but you have to know which one is being asked about. Some other posts than OP have suggested West Coast. But the reasons WC gas prices vary more, besides being generally higher, have a significant amount to do with public policies. It’s partly a natural arrangement that the WC supply/demand for gasoline is mainly isolated from the rest of the US: basically no pipeline connection, limited rail and very limited domestic tanker transport from Gulf. Therefore the ‘old’ US model generally prevails of relatively large net import of crude and domestic refineries operating almost exclusively to serve local product consumption (also ‘bespoke’ crude from Alaska that tends not to go elsewhere).
In the Gulf/East connected system there’s now consistent big net export of oil products from US refineries, and significant export of crude though for now relatively balanced by import (nationally the US for now still imports significant net crude most of the time but some of that is accounted for by net imports on WC). And lots of pipelines and coastal transport. Therefore, relatively small increases or decreases in wholesale gasoline prices make producers shift gasoline to where it gets them the best price in that interconnected system, including deciding to export it or not, and that tends to damp price swings in gasoline over and above those seen in the world crude market.
The West Coast system is more brittle. And that’s exacerbated by special fuel blend requirements, as well as measures stacked against crude production from new fields in the region to the extent the market would otherwise support that. Also gas taxes are just high, by US though not overall rich world standards, in some of those states.
