Wondering about gas prices?
I spent $40 this morning to fill up with regular gas at about $3 per gallon at the XtraMart on Gorham Street, near the courthouse. Humorist Lewis Black might say, What the F#&*%! Did I miss a new oil embargo, or did China buy up all the crude last week for sedans in Shanghai? Is there one politician in D.C. noticing this increase just around the time that people are driving more because of holiday travel? A coincidence involving our fellow Americans in the petrochemical industry? What happened to those mammoth windfall profits of a couple of years ago when oil prices spiked? How about the oil companies giving us a rebate for the holidays? Oh, I see, that money was invested in solar energy research and spent on reprinting company letterhead in green ink to announce the enviro style is in. Here’s what I found in a quick search, from the Associated Press in a news blip this morning:
ATLANTA – Filling up at the pump costs more this week. The average price of regular unleaded gas has risen 11 cents in the past week to $2.83 per gallon.
The national average is up 7 cents to $2.93.
The Atlanta Journal-Constitution reports that a weak dollar is pushing gas prices up and experts say the increases will likely continue.
The AAA Auto Club says lower job growth than expected last month weakened the dollar and made crude oil a more appealing commodity to foreign investors.
A month ago, regular unleaded cost an average of $2.69 in Georgia.
A year ago, it was at $2.52, which is 31 cents below the current price.
(from the Associated Press, December 6, 2010)
3 Responses to Wondering about gas prices?
There are many reasons, but here are a few:
The demand of holiday travel lets the suppliers boost their prices and still retain volume. To the degree that this is the reason, look for prices to turn down after the holidays.
BP must make up for its substantial losses from this summer, so they may have even higher prices for awhile.
QE2 effectively prints money, but diminishes the value of the dollar relative to foreign products, and oil is mostly a foreign product to us.
JoeS is correct to point to QE2 as one cause of higher oil prices. Also, with continued uncertainty in major markets, the rush toward hard assets is only becoming more frantic. Investors are very wary of all fiat paper, including the de facto world reserve currency, the US dollar (thanks in part to QE).
In addition, a few weeks ago the International Energy Agency released its World Energy Report, which concluded that the preponderance of future oil supplies will come from as yet undeveloped oil fields. That doesn’t sound encouraging. (http://www.minyanville.com/businessmarkets/articles/international-energy-agency-iea-iea-report/11/24/2010/id/31320)
The Pentagon knows we are living in an era of peak oil (http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply). Oil production is all down hill from here.
Joe, Michael: Thanks for chiming in. I thought it was worth putting the topic on the table since the price has been creeping up for several weeks. Gas is still a lot cheaper than a gallon of coffee at Dunkin’s, but the fluctuations in gas prices can make a person wonder about profiteers, not at the local pump but back up the line in global sales and production.