Increase Crude Prices Drives Rising Gasoline Costs
Drivers who have not filled their tanks when the week started may regret it as gasoline prices keeps on increasing. Experts even say that during the Spring season, US gas prices such as in the state of Texas may reach $4 per gallon.
There has been a recent jump of 4 cents in San Antonio’s average gas price to reach $3.33 per gallon for regular unleaded gasoline. At present, San Antonio motorists are already spending 42 cents more for gasoline compared to last year, said the AAA.
Almost everyone loves to blame companies for the price hike. However, there are several other reasons like higher crude oil prices and shutting down of refineries why gasoline prices continue to grow. Aside from these, positivity of a stronger economy that results to higher demand also plays a factor in the rising cost at the pump. Moreover, tensions in the Middle East also plays a part in the presently high gas prices.
According to Director Bruce Bullock of Southern Methodist University’s Maguire Energy Institute at Cox School of Business crude oil prices during this period of the year is at a record high that is why gas prices are also at the same level in the major parts of the United States. He said that come springtime, gas prices may possibly reach a high range of $3 in Texas.
Many are shocked by the recent jump in gasoline prices. However, Tom Kloza, Oil Price Information Service’s chief analyst, said that the current increase is minimal relative to what is expected in the coming months. He said that gasoline costs are expected to shoot up due to higher crude oil prices that are partly caused by closures in refineries and minimal recovery in oil demand during the spring months of March, April and May. Although he does not believe other analysts forecasting that gas prices may reach at least $4.6 per gallon, he thinks that it may possibly reach $4 per gallon.
For San Antonio, the average gas price history remained lower compared to the entire country. The maximum amount that they have ever paid for gasoline was in July 16, 2008 when the price per gallon of gasoline increased to $3.96.
The market was also recently rattled with threats of strikes that can possibly close several refineries. As an example, the Valero Energy Corp of San Antonio expressed its plan to shut down its plant in Memphis, Tennessee in case a strike occurs.
During the fall and winter season of last year, two East Coast refineries closed down together with a main plant in the Virgin Islands and several small ones in Europe. All these aroused fears that supplies of gas may be affected.
Traders and speculators have also joined the bandwagon and bid up oil futures. Aside from this, the current crude oil price rose by 3% in the past month. Costs of gasoline have always been dictated by the benchmark Brent crude prices. Recently Brent per barrel crude price during trading was about $111. It reached a historic high of $145.91 in July of 2008.
For as long as Brent increases, gasoline will always follow, said Brian Youngberg, Edward Jones’ senior energy analyst.