How Close is $4/gallon Gas?

We’re on the verge of $4 a gallon gasoline, with the latest price increase just a few days ago in Lamar to $3.959.  Gas prices are expected to peak in May, just prior to the start of the summer season in the U.S., during our Memorial Day holiday.  The first week of January, the price of a gallon of regular at the pumps was $3.059, and by the end of February, prices started to increase almost weekly. 

The price increases have been blamed on the rising cost of crude oil per barrel, with experts saying a $100 barrel of oil is now the new ‘norm’.  CNNMONEY issued a news article this week (4/10), reporting that a lack of refineries along the east coast of the U.S. has also contributed to rising prices; with the east coast getting hit the hardest at first, especially if more of the main nine Northeast refineries should stop producing. 

In December, Sunoco closed a refinery near Philadelphia and is trying to sell another one nearby.   The company has claimed, according to the article, that it is losing $1 million a day for the past three years.  Last fall, another refiner, Conoco-Philips also closed a Philadelphia based refinery.  The article accounts are that these plants are so old, they are not equipped to process the heavier types of crude oil being produced more cheaply from oil sands in Canada and the Middle East and South American countries. 

Oil that is considered light and sweet can be made into gasoline more easily, but it also costs more per barrel.  Light and sweet oil is defined as being low in sulfur content and less dense than the more cheaply drilled crude oil.  Another contributing factor to increased prices is the cost of transporting the crude oil for processing.  Some outlets in New York state can transport the oil through pipelines, but on the whole, the fuel is shipped in and out by tanker trucks, adding to the cost.  Some analysts believe the east coast will see a fuel shortage after the peak summer driving season. 

Here’s a general time line of prices of regular gas per gallon in Lamar for the past several months: 

Week of:                             Price: 

4/11/12                                3.959
3/26/12                                3.899
3/19/12                                3.689
3/12/12                                3.599
3/5/12                                  3.399
2/27/12                                3.299
2/20/12                                3.259
2/13/12                                3.199
11/29/11                              3.299
12/19/11                              3.199
11/04/11                              3.559
10/19/11                              3.559

By  Russ Baldwin