After a long, long slide, gas prices have finally bottomed out and are on their way back up. Nationally, AAA reported that the average price for a gallon of gas reached $2.03, the lowest prices have been in 5 years. So why are gas prices going back up? And how long will they continue to go up? Learn what’s going on with gas prices in this week’s blog.
Gas prices went down last year because the supply of oil jumped. This was in large part due to an increase in production from U.S. oil fields, and the news from OPEC that they would not decrease production as a response. But when 2015 arrived, gas prices started to go back up. There are a number of reasons for this.
First, this is the time of year when oil refineries schedule routine maintenance, because they’re usually less busy. Routine maintenance means production has to be limited or even stopped altogether. So there’s one thing slowing down production, which causes prices to increase.
The weather is another reason prices are going up. The very cold weather and snow that East Coast has seen in February have made operations more difficult for “about two-thirds of the region’s refining capacity, hampering production. Among other setbacks, a partial freeze of the Delaware River snarled deliveries and interrupted the cooling systems refineries in Philadelphia, according to Reuters.”
A third factor is the largest strike in the refinery industry in 35 years, which is happening right now. “Some 6,500 members of the United Steelworkers union at 12 refineries covering about a fifth of U.S. capacity” are on strike as a result of contract negotiations.
Up and Down
So what’s in the future for gas prices? Analysts expect the price of crude oil to remain steady, and supply is expected to continue to be high. Gas prices always rise in the spring as refineries begin to produce more expensive federally mandated summer gasoline blends, so we will see a steady increase over the next few months. But, analysts expect price increases to level off by the summer. But of course, we won’t know for sure until it actually happens!
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