More Pain At The Pump
Back in the late nineties, I picked up a used Toyota Corolla. I was driving about 30 miles each way to work at that time, so I needed something economical. My logic was (and still is), if it gets me there and back safely, that’s all I care about. Yet, my buddies never stopped “reminding” me that I drove a “piece of crap.” Of course, most of them drove SUVs (I’d driven every Jeep model since the late eighties ‘til that time, and wasn’t impressed). It’s been a while since I’ve talked to those guys, but I wouldn’t be surprised to see them crying at how much it costs to fill up their urban “tractors” these days. And some analysts are predicting more pain at the pump to follow. Earlier today CNN Money said experts are predicting U.S. drivers will see $3 gasoline before the new year. The all-time high of more than $3.18 was reached back on May 18, 2007. One of those interviewed, Stephen Schork, publisher of industry newsletter The Schork Report, declared that, “$3 gasoline in this market is unavoidable. At this rate, we’re going to see $4 a gallon.” Even with oil around $90, U.S. drivers have been pretty lucky. AAA said that the national average price for gasoline this month has risen barely one cent from $2.81 in September. But some analysts think this is all about to change. While the refiners are paying top-dollar to acquire the more expensive crude, they haven’t passed along the extra costs to consumers…yet. Kevin Norrish, a commodities analyst at Barclays in London, told CNN Money, “That doesn’t seem sustainable,” and predicts that refiners will likely scale back gas production- just as demand picks up for the holidays. Schork thinks that a lack of refining capacity will lead to a “struggle” to produce both gasoline and heating oil, resulting in the importation of more gas during the holidays. With the tumbling U.S. dollar, he notes that this will be an expensive undertaking.
In last Sunday’s post, I talked about how the national average for self-serve regular unleaded gas was up 4.92 cents per gallon over the previous 2 weeks to $2.80 a gallon, according to the latest nationwide Lundberg survey of about 7,000 gas stations. Survey editor Trilby Lundberg told Reuters last weekend:
While gasoline prices moved up just under a nickel in that period, crude oil prices are up the equivalent of 18 cents per gallon. That missing 13 cents and more will probably turn up at the pump and soon because it represents margin squeeze over months for refiners, jobbers and retails — those who make, deliver and sell gasoline.
Lundberg also predicts the average price of gasoline will exceed $3 per gallon in the coming weeks.
Ouch. If prices at the pump get really nasty, you may see a next-generation SUV on a road near you…
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