Gasoline prices creep back up

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For the past two weeks I have basked in the numbers shining forth from the gallon and dollar counters at my local gasoline pump.

Filling up my vehicle cost me less than an Andrew Jackson each time.

I was paying roughly $1.60 for a gallon of regular gasoline. The average price locally was about $1.70 a gallon.

That’s a far cry from June, when we were paying an average of $4.26 a gallon for petrol.

In fact, that’s the lowest price we’ve seen in five years — $1.59 in January 2004, according to VegasGasPrices.com.

I recalled thinking at the time, “As long as things stay calm in the Middle East, these prices might stick around.”

Wishful thinking.

Agreeing to disagree doesn’t seem to be in the cards for some Israelis and Palestinians.

As a result, those who control the price at the pump quickly jacked up the price at the slightest bit of tension, even if that tension was in a country not known for massive oil exporting.

And with that tension, a seven-month downward spiral for the cost of gasoline in the valley came to an abrupt halt.

Since the new year, the average price for a gallon of regular gasoline has jumped more than 10 cents higher. The week ended with an average price in the valley of about $1.87 a gallon, according to VegasGasPrices.com.

Regardless of conflicts in the Middle East, earlier this week the experts were warning that gasoline price increases were here to stay.

The experts pointed to oil production cuts by the Organization of Petroleum Exporting Countries.

And, according to the U.S. Energy Department, refineries in December cut the number of crude oil barrels processed from about 15.4 million a week in 2007 to 14.5 million in 2008.

Earlier this week, it seemed like the experts were correct, as the price for a barrel of light, sweet crude oil future jumped to a three-week high of $49.28 on the New York Mercantile Exchange.

Of course cutting the supply is only one side of the coin. And that’s where the experts have been running into a problem, because Americans are still not driving that much.

That tends to happen when you don’t have a job.

With worsening economic news this week, including higher unemployment and spending declines, we may yet see even lower gasoline prices.

In a note to investors, Deutsche Bank wrote, “We expect global oil demand growth to be significantly worse in 2009 than consensus forecasts. In an environment of rising OPEC spare capacity and excess global refining capability, we believe oil prices will not hit rock bottom until the end of this year as OPEC production cuts work their way through the system and global growth starts to recover,” according to The Associated Press.

That seems like a good analysis as the price of crude oil dropped 17 percent from Monday’s high, closing at $40.83 a barrel on Friday.

That’s a long way from crude oil’s peek of $147 a barrel in July.

And the dropping price of crude oil futures this month will likely lead to lower gasoline prices next month.

While I doubt we’ll hit a six-year low — a gallon of petrol went for $1.32 in January 2003 — I don’t think we have to worry about seeing $4 a gallon again anytime soon.

Who says worldwide economic collapse and a recession doesn’t have an upside?

If you have a question, tip or tirade, call the Road Warrior at 387-2904, or e-mail him at roadwarrior@reviewjournal.com or fmccabe@reviewjournal.com. Please include your phone number.