Published Friday, February 22, 2013
By SARAH FAY CAMPBELL
Cowetans are seeing gasoline priced at $3.79, and average gasoline prices in the metro Atlanta area have jumped up nearly 50 cents in just the past month — and 20 cents in the past week.
Prices are expected to continue to climb at least until April, though hopes are the rate of increase will slow significantly.
“We’re expecting that these prices will continue to climb, but we are cautiously hopeful the increase will be at a much slower rate than what we have seen in the last month,” said Gregg Laskoski, petroleum analyst with gasbuddy.com .
“If it’s any consolation... wholesale prices yesterday actually came down, maybe six or seven cents,” Laskoski said Thursday.
He’s not seeing that leading to a decline in prices at the pump, but “we may see the price climb pause momentarily.”
In Newnan on Thursday, the cheapest regular unleaded found was $3.74 a gallon.
Stations along Bullsboro Drive known for typically having the cheapest gas prices were offering regular unleaded for $3.79.
That’s up from $3.54 and $3.55 just one week ago. Just a little over two months ago, on Dec. 19, some stations had regular unleaded for $2.99.
There are a number of issues leading to the higher gasoline prices this winter, including refinery reductions and maintenance related to the switch to summer blend gas, speculation in the market, and a weak dollar.
Most areas of the country have to switch to the summer blend by May 1. In preparation for that, refineries “are looking to basically shut down some of their operation and reduce their winter blend inventories,” Laskoski said. While units are offline, refineries do maintenance on them.
In mid-December, refineries were operating at 91 percent of capacity nationally. On Thursday, they were at 82.9 percent, Laskoski said.
East coast refineries were down from 75 percent of capacity last week to just 72 percent this week.
The Gulf Coast refineries, which are the primary supplier for Georgia, are at 81 percent, he said.
Refineries are “never at 100” percent. Capacity fluctuates throughout the year. For this time of the year, “if you are in the high 80s, that is about as well as can be expected.”
The nation’s gasoline inventory is down by 2.9 million barrels over the past week, Laskoski said.
Speculation continues to play a role, as it has for many years. “Since December, there has been $20 billion pumped into crude oil. So there is a lot of investment there.”
Bart Chilton, one of the commissioners of the U.S Commodity Futures Trading Commission, put it bluntly when he recently spoke at Arkansas State University.
“There is plenty of reputable and reliable evidence documenting what many of us simply know: that excessive speculation can contort markets.”
“Our staff has looked at trading in crude oil and has found that commercials are part of only a tiny fraction of the trades that account for price changes,” Chilton said. “In other words, non-commercials — speculators — are dominating the price discovery process in crude oil.”
“The issue isn’t whether speculators affect the market; the issue in many instances is that speculators have become the market,” Chilton said.
The weak dollar has long been one of the culprits in high gas and oil prices.
“That means it takes more of those dollars to produce the oil, to bring it to the refinery, and more of those dollars for consumers to buy the finished product at the pump,” Laskoski said. “The Intentional Monetary Fund reported this week that the U.S. dollar is at its lowest point in 15 years.”
The analysts as GasBuddy are currently projecting a price peak in Georgia of between $3.80 and $4.10 a gallon, Laskoski said.
On Thursday, the Georgia state average price for regular unleaded was $3.76, according to AAA’s fuelgaugereport.aaa.com website. The national average was $3.778.