Cheap Gas: Once Again, It’s Over

The days we fondly know of as cheap gas days are now being pushed further away from the rearview mirror. This is because the prices continue to inch its way closer to the two dollars per gallon mark. This is another set of bad news for those who belong to the growing ranks of the jobless American people who are currently pinching pennies as well as looking for other ways to save up and cut on costs. The price of gas at the moment may be welcomed by a lot of the summertime drivers, but only because it is at fifty percent of the all-time price high of around four dollars and eleven US cents per gallon which was achieved at July 17.

But because gas prices ended up slumping to yet another low of one dollar and sixty one cents last December 30, it has increased to more than twenty percent. At the price it is at right now, it might be able to eclipse the two dollar per gallon rate. This is what is happening at a time when the price of crude oil is trading really high below the forty dollar per barrel mark.

Backlashes Abound

According to Ben Brockwell, the OPUS data pricing director, what we are currently seeing now is a backlash of this entire period – from the summer up until the end of the year. It is during these times when refiners have begun selling gas straight into the consumer market with a discounted rate of crude oil. Brockwell went on to say that many refineries ended up losing big money the previous year even when there were surges in the prices of gas. These refineries, in the second half of the year 2008, ended up paying so many dollars for the price of oil and then were able to produce their own gasoline in an economy that is deemed to be low demand. At the moment, these refineries are also producing even less – thus driving up the prices while in this low demand economy and at the same time putting a stockpile on the discounted oil.

Hard to Gauge the Effect

John Lonski, the chief economist of Moody’s, also said that it can be pretty hard to gauge the impact that this has on Americans, who have continuously cutting back when it comes to their driving ever since the previous year and have consciously avoided purchasing gas-guzzling vehicles with larger bodies. Lonski went on to say that they would rather see lower energy prices but at the moment it is not part of the concern over consumer spending. There may be a list of the things which one must avoid worrying about, but it is definitely not as high ranked as when it was spring or summer. During these seasons, the prices of gas really shot up.