Current Event 03/05/2009

Cheap Gas is History, again
by: Aaron Smith

Gas prices are now beginning to cheap up to 2.00 dollars a gallon. Last year in the summer the price of gas was nearing $4.11, and now the gas prices are half that, but they continue to go up each week. On December 30th the gas prices slummped to $1.61, however, they have jumped more than 20%. At their current rate they could easily reach over two dollars. This is occuring with crude oil prices being $40 dollar per barrel.

"I think what you're seeing now is a backlash of a period, from the end of the summer until the end of the year, when refiners were selling gas into the consumer market at a discount to crude oil," said Ben Brockwell, director of data pricing for OPUS. Brockwell said refineries lost money last year, despite the surge in gas prices. The refineries in the latter half of 2008 were paying top dollar for oil, and then producing gasoline in a low-demand economy, he said. Now, refineries are producing less, driving up prices in even this low-demand economy, while stockpiling discount oil, he said.

People in the United States have cut down on their driving ever since the downturn of the economy to save ever little penny that they can. Gas prices will probably keep going up, as they often do in late winter and early spring, when refineries traditionally conduct annual maintenance on their facilities, said Peter Beutel of energy risk firm Cameron Hanover.

However, because of the low demand prices should not go as sky high as they went last year.