Attention, drivers: Get ready for some serious pain at the pump.
Analysts tell the Los Angeles Times that gas prices will hit $4 a gallon or more by spring, and — hold on to your wallets — could reach $5 over Memorial Day weekend.
Just when I’m about to add a 3rd driver to my family.
And those are just average prices. GasBuddy.com, which posts prices from around the country as reported by its more than 300,000 member motorists, predicts record prices in major cities all over the map this spring. The site forecasts $4.95 a gallon in Chicago and $4.70 in Los Angeles, with record prices also hitting Philadelphia, Seattle, Detroit, Miami, Minneapolis, Dallas and San Francisco.
I’ve always wanted to be a part of a record.
The single-day record average price for regular unleaded is $4.11 a gallon, which happened on July 17, 2008. By comparison, the average this morning, according to AAA, is $3.39, 29 cents higher than a year ago.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, joked to the Times that drivers with SUVs might consider calling their banks to get a credit-limit increase so they can afford to drive this summer. It’s funny because, well, it’s almost true.
I am no longer an SUV driver. I now have a cross-over and a piece of crap.
See if this next part makes any sense to you.
So, why are gas prices rising, and expected to go so much higher? For starters, the price of crude oil from overseas is going up, and the U.S. is the world’s largest importer.
OK, so demand increases or supply decreases, in other countries, have driven up the price of the primary input to gas, thereby raising gas prices. I can buy that.
But the real surprise factor is that the pace of U.S. fuel exports has been picking up — so much so that fuel is now the country’s top export. Last year marked the first time in more than 60 years that the U.S. was a net exporter of gasoline, diesel and jet fuel.
I assume this is because taxes and other add-ons in other gas producing countries are higher than U.S. add-ons, so U.S. refined gas is relatively cheaper. This means a decrease in the domestic supply of gas which will raise gas prices. OK, I’m still with you.
How does a country known for a culture of driving in gas-guzzling vehicles become a net exporter of fuel? Analysts say the weak economy has led people to drive fewer miles, and they’re doing so in more fuel-efficient cars and trucks. That means a surplus for domestic refiners, who are selling it to other countries.
You lost me.
Demand has decreased in the U.S. Demand decreases cause downward pressure on prices (to alleviate the surplus created if the price were to stay high). How is this a cause of higher gas prices? Driving less lowers gas prices.
Is anyone else confused?
So, as a driver, gas prices aren’t something you can control.
Wrong, wrong, WRONG! No. WRONG! OK, slightly right. In a competitive market you can’t control gas prices. You are a price taker. But you can control gas expenditures, and that’s what really matters here. It’s not that you can’t afford a gallon of gas (at the margin). It’s that you can’t afford the same number of miles driven. So to reduce the cost of miles driven, DRIVE LESS!*
What can you do to save money, besides walking, biking or taking the bus?
DRIVE LESS! Come on say it…
Damn, that’s not it.
So DRIVE MORE? to find lower prices???
It’s simple supply and demand: When prices are going up, you’ll get a better deal at stations that do less business, because they’re sitting on gas they need to get rid of. Conversely, when prices are falling, busier stations will be a better deal.
*For the new reader, DRIVE LESS! is a recurring public service campaign that I run here at Env-Econ any time gas prices start to rise. It centers around the question “What can I do to lower gas prices?” There is really only one answer to that question “DRIVE LESS!” And here’s a description of the seed from the 5-year grassroots phenomenon that is DRIVE LESS!
Is it really time to bring back the Drive Less! campaign?
Tue, 17 Jan 2012 17:19:10 GMT