U.S.
5:18 pm
Thu August 16, 2012

Drivers Wonder Where Price Of Gas Will Go Next

Originally published on Fri August 17, 2012 2:39 pm

If you plot out a chart of 2012's average gasoline prices, you get what looks like a roller coaster. There's a steady increase from January to April, the spring peak around $4 per gallon, and then a steady decline in May and June.

By the beginning of July, the national average was hovering around $3.42.

But since then, that roller coaster chart has been heading into its second big climb. Prices have been going up since July 1, and are now approaching $3.80.

So, many drivers are now wondering if we should soon expect to pay even more — or if we're near the peak.

Tom Kloza, chief oil analyst for the Oil Price Information Service, thinks it's a short-term problem.

"This is something you'll have to put up with for a few weeks, maybe more if you're on the West Coast," he says. "But certainly not in the majority of the country."

Problems In The Supply Chain

Two factors are driving the recent increases. The first, as expected, is the price of crude oil, which has risen to about $94 a barrel from around $80 in June.

The second factor is a bit more unusual — a series of problems in the nation's energy infrastructure have created kinks in the supply chain.

"It's the end of the summer. Refineries have been running hard, and running at high rates," Kloza says. "And sometimes you get a cluster of breakdowns."

A recent fire at a Chevron refinery in Richmond, Calif., was the biggest issue, but two Midwestern refineries also suffered equipment failures around the same time.

Due in large part to the Richmond fire, gas is already approaching $4 per gallon on the West Coast. The increase has been more subtle in places like Pennsylvania. So much so, that some drivers, like Marie Watson, who recently filled up her car at a Harrisburg gas station, haven't even noticed it.

Three pumps over, Anna Nielsen has noticed the change, but says the increase hasn't affected her driving habits.

"It's just kind of something I deal with," Nielsen says. "I'm really lucky, because I get really good gas mileage."

But Nielson says she'd probably cut back on travel if gas tops $4 a gallon.

"My mom lives in Lancaster," she says. "I probably wouldn't go see her as often. My best friend lives in Philadelphia. So, I probably wouldn't be doing as much of those longer trips."

Relief In Sight

National driving demand typically starts to fall after Labor Day. So barring a major disruption in oil or gasoline supply, like a major Gulf Coast hurricane, analysts like Tom Kloza expect prices to start falling in mid-September, and stay down until the spring, when the whole cycle starts again.

"In the fall and the winter, there's plenty of gasoline. We don't drive as much," Kloza says.

The shift from summer- to winter-blend gas in pollution-prone areas will also help bring down the cost as the temperatures start to fall.

Copyright 2012 WITF-FM. To see more, visit http://www.witf.org/.

Transcript

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

Nationwide, the average price of gasoline has ticked up more than 30 cents a gallon since July 1st.

Scott Detrow, of member station WITF in Harrisburg, Pennsylvania, reports on the cause of the spike and whether an end is in sight.

SCOTT DETROW, BYLINE: If you plot out a chart of 2012's average gasoline prices, you get what looks like a roller coaster - the steady increase from January to April, the spring peak around $4 per gallon, and then a steady decline in May and June.

At the beginning of last month, the national average was about $3.42. But since then, that sharp roller coaster has been heading into its second big climb. Prices have been going up and up since July 1st, and are now approaching $3.80. So are we still climbing or near the peak?

Tom Kloza, the chief oil analyst for the Oil Price Information Service, thinks it's a short-term problem.

TOM KLOZA: This is something you'll have to put up with for a few weeks, maybe more if you're on the West Coast, but certainly not in the majority of the country.

DETROW: Two factors are driving the increases. The first, like always, is the price of crude oil, which has risen from around $80 a barrel to about $94 since June. The second factor is a bit more unusual, a series of problems in the United States' energy infrastructure have created kinks in the supply chain.

KLOZA: It's the end of the summer. Refineries have been running hard and running at high rates, and sometimes you get a cluster of breakdowns.

DETROW: A fire at a Chevron refinery in Richmond, California, was the biggest issue. But two Midwestern refineries also suffered equipment failures around the same time.

(SOUNDBITE OF A GAS NOZZLE)

DETROW: Due mostly to the Richmond fire, gas is already approaching $4 on the West Coast. The increase has been more subdued in places like Pennsylvania. So much so, that some drivers, like Marie Watson, who's filling up her car at a Harrisburg gas station, haven't even noticed it.

MARIE WATSON: I think it's gone down just a tad bit.

DETROW: They went down in the spring but now they're going back up.

WATSON: OK.

DETROW: Three pumps over, Anna Nielsen has noticed the change. But she says it has not affected her driving habits.

ANNA NIELSEN: It's just kind of something I deal with. I'm really lucky 'cause I get really good gas mileage.

DETROW: Nielson says she'd probably cut back on travel if gas tops $4 a gallon.

NIELSEN: Like, my mom lives in Lancaster and I probably wouldn't go see her as often. My best friend lives in Philadelphia. So, I probably wouldn't be doing as much of those longer trips.

DETROW: National driving demand typically starts to fall after Labor Day. So, barring a major disruption in oil or gasoline supply, like a major Gulf Coast hurricane, experts like Tom Kloza expect prices to start falling in mid-September, and stay down until the spring.

KLOZA: When the whole cycle starts again. In the fall and the winter, there's plenty of gasoline. We don't drive as much.

DETROW: The shift from summer to winter-blend gas in pollution-prone areas will also help bring down the cost.

For NPR News, I'm Scott Detrow in Harrisburg, Pennsylvania. Transcript provided by NPR, Copyright National Public Radio.