Fill ‘er Up: Gas Prices On The Rise

Gas pries are shown on a sign at a gas station, Thursday, May 21, 2009, in Grand Prairie, Texas. The economic slack created by the recession all but guarantees prices won't spike the way they did last year, analysts say. (AP Photo/Matt Slocum)Is it going to be, as the always-quotable Yogi Berra once said, "deja vu all over again" for gas prices this summer?

Let’s hope not. Economic conditions being what they are right now, the last thing we need is fuel back over the four-buck-a-gallon mark. But isn’t it funny how, just as Memorial Day gets closer and the start of the summer season rapidly approaches, gas prices suddenly start creeping upward?

Actually, it seems like they’ve done a little more than "creep" over the last couple of weeks. It seems like, at least twice a week from the end of April up to now, I’ve observed the per-gallon rate jump between a nickel and a dime at Worthington fueling stations. So what’s the deal here?

An Associated Press article this morning tells some of the story:

" … For much of this year, there has been a glut of gasoline in storage around the country, keeping prices low. And demand has been light because of the poor economy.

But gasoline has jumped in May. Oil refineries, trying to make money just like any other business, are taking in less oil because of the glut in gas, and those cutbacks are showing up at the pump.

At the same time, prices are starting to rise for seasonal reasons. Americans drive more in summer, and federal and state laws require different, more expensive gasoline blends this time of year.

The trading markets are at work, too. By mid-February, the price of oil had fallen so far — below $34 a barrel, compared with a peak of $147 last July — that large investors couldn’t resist buying in."

Here’s the sentence (or portion of a sentence) that’s the key to this whole picture: "Oil refineries, trying to make money just like any other business." Is it possible that Big Oil knows that since people are going to want to do a lot more traveling in the next few months, it knows it can get away with charging more at the pump? People, after all, already have their vacations planned in many instances.

Here’s another graph from the same AP story:

"Darin Newsom, senior energy analyst at DTN in Omaha, Neb., said he expects the average price for regular unleaded to push $2.80 a gallon this summer — higher than many other forecasts. Even if a devastating hurricane strikes, he thinks prices will stay below $3.10 a gallon."

Wow, $2.80 to $3.10. I suppose that’s a lot better than last summer, but that figure still is considerably more than per-gallon costs were forecast at a few short weeks ago. Interesting how the government can meddle its way into all kinds of institutions and the auto industry, yet somehow manage to leave Big Oil off the hook and unaccountable.