Not that this will come as much of a surprise to cynical motorists, but gasoline prices are likely to stay high this summer, according to oil refining firm Countrymark Cooperative LLP.
Yes, it’s the usual reasons-refinery problems, geopolitical tensions, OPEC production restrains and summer travel demand.
And, yes, the hurricane season could disrupt production.
“The potential for continued high prices this summer is possible because NOAA [National Oceanic & Atmospheric Administration] predicts an above-normal hurricane season,” said Blaine Duxbury, petroleum risk manager for the Indianapolis-based co-op. “Conversely, if Gulf Coast refineries escape the crosshairs of hurricanes, we could also see a price drop like last summer.”
Few motorists would bet on that.
Last April, some were predicting gas prices would be $2.60 to $2.70 a gallon this summer-well below the current $3.25 per gallon. Duxbury said that estimate did not foresee abnormal U.S. refinery production. Instead, predictions were based on refiners having relatively few problems.
Some refiners blame severe government environmental rules for not building new refineries. Petroleum industry critics counter that refiners deliberately are not building new refineries in order to keep supply tight, prices high and profits high.
“The market is attempting to make us cut back consumption-by raising prices-but we’re not doing it. Higher prices usually decrease demand, which in turn lowers prices,” Duxbury says. “But consumption of both gasoline and diesel currently remains strong despite higher prices.”