WaPo: What’s going on with gas prices?

posted at 9:21 am on February 20, 2013 by Ed Morrissey

We’re in the middle of a colder-than-usual winter, with record snow storms in the Northeast and average-or-better snowfall in the Midwest.  After last year’s mild winter, temperatures have gotten much frostier in 2013.  Normally, this would lower demand for gasoline and push prices downward.  So why, the Washington Post wonders, have gas prices increased for 33 straight days, and are now approaching summer 2012 levels?

The average price of a gallon of regular gasoline has jumped 45 cents in the past 31 days, according to AAA, the fastest run-up since 2005.

Retail gasoline prices have climbed for 33 days in a row. A month ago, a gallon of regular gasoline cost $3.30; on Tuesday it stood at $3.75 nationwide.

Gasoline prices have risen to within a nickel of $4 a gallon in the District as pump prices nationwide have been marching higher — the result of refinery closures and maintenance, lower oil production by Saudi Arabia, market anxiety about tensions in Iran and Iraq, and guarded optimism about the prospects for economic recovery in the United States, Europe and China.

The timing couldn’t be worse, either, as a spokesperson for AAA pointed out:

“This is the most expensive we’ve seen gasoline in the dead of winter,” which is ususally a time of relatively low consumption, said John Townsend, a spokesman for AAA Mid-Atlantic. Noting that the increase comes just as the payroll tax cut has expired, Townsend said that “this is a double whammy for many consumers, especially on the East Coast, because many people there use home heating oil. . . . People got that shock to the system and now a shock at the gas pumps.”

In New Jersey, a single refinery closure for routine maintenance is the culprit:

Tuesday marked the 33rd consecutive day of rising gas prices across the U.S, according to a spokesman from the American Automobile Association, marking the longest run of fuel-cost increases since 2011.

According to South Jersey AAA spokesman Rich Bradley, the most recent spike in gas prices stems partly from a refinery closure in Saint Croix resulting in one million barrels of crude oil sitting idle, combined with slowdowns at 25 percent of U.S. refineries for scheduled maintenance work.

“Gas companies are also switching over from a winter blend to a summer blend, so there’s just not a lot of fuel out there, which is driving up cost,” said Bradley. “Also, there’s still the remnants of the disruption caused by (Superstorm) Sandy — that’s going to be less and less each day, but it’s still a factor.”

And when gas prices rise …

Worse yet, increasing fuel prices are expected to impact the cost of other goods and services, hitting consumers with a second punch.

How can we avoid these prices spikes in the future?  First, we could produce more of our own oil — a point recently made by several Southern governors to incoming Interior Secretary Sally Jewell.  We also need more refineries in order to provide more flexibility for maintenance scheduling and output capacity.  For both purposes, we need the EPA to back off its regulatory adventurism, and state and local governments to do the same.

Unfortunately, the former looks like a pipe dream — almost literally — in a second Obama term, even with Jewell’s experience in the oil industry.  Get used to rapidly rising fuel costs, and the associated inflation they bring.  Only another round of recession and economic stagnation will prevent it.


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