Pump relief may come after Labor Day
By ROBERT R. JONES III
Motorists should expect gasoline prices to remain high at least through the Labor Day weekend, according to industry experts.
The average gas prices in Louisiana have risen slightly over 2 cents per gallon in the last week and are averaging $3.53 across the state, according to louisianagasprices.com, an affiliate of gasbuddy.com.
Gasbuddy.com tracks gas prices nationwide.
This is an increase of 11 cents over the same period one year ago and 29 cents higher than just one month ago.
Don Briggs, Louisiana Oil and Gas Association president, said the recent gas price increases are directly attributed to rising crude oil prices, both domestically and internationally.
“Right now, oil prices are at about $100 per barrel,” he said. “That is up $20 per barrel over just two weeks ago and is resulting in gas prices rising about 20 cents per gallon.”
Increased summer demand and refinery operations also played a role in the increased prices, Briggs said.
Refineries shut down for maintenance and begin operations to switch over for winter fuels, resulting in higher prices.
“Just the Exxon refinery in Baton Rouge makes 21 or 22 different types of fuels,” Briggs said. “When the refineries prepare to switch from summer to winter fuels, they shut down for maintenance and this also raises the cost of gas because supply drops during this period.”
Gasbuddy.com Senior Petroleum Analyst Patrick DeHaan also attributed refinery problems with the rise in gas prices.
Refinery problems on the West Coast and Great Lakes regions have also lead to reduced supply, resulting in higher prices, though he expects the issues to be resolved soon, he said.
Prices are also expected to begin to taper off after the Labor Day weekend, when demand falls off, DeHaan said.
Another major factor affecting the price of fuel in the U.S. is domestic dependence on foreign nations, some unfriendly, Briggs said.
It is profitable for foreign nations such as Saudi Arabia and other oil producing nations to keep crude oil prices at about $100 per barrel, so they are in no rush to lower domestic costs to consumers, he said.
This plays a major factor in local gas prices over the long term, as export nations do not want to operate at full capacity to keep prices high.
“We are dependent on some oil suppliers that do not like us,” Briggs said. “Until we are less dependent on foreign oil, we will be at the mercy of these countries.”
According to information provided by Chevron, a third factor influencing the price of gasoline is the fact that crude oil is traded as a commodity on the world market and is the primary ingredient used to create gas.
Rising global demand and political instability in several oil producing countries have major influences over the local cost of gas to local residents.
According to the AP, unrest is again contributing to rising prices along with demand and refinery problems.
The price at the pump in the U.S. fell more than 60 cents per gallon during the spring when oil fell as the global economy slowed and turmoil in the Middle East seemed to subside, the AP reported.
But oil has risen to $96 per barrel from $78 in late June. Investors have been worried about disruption to oil supplies in the Middle East and North Sea. In the U.S., there were problems with refineries and pipelines in the West Coast and Midwest, including a fire in California. Seasonal factors are also at play: Summer blends of gas cost more and demand goes up as families go on vacation.