http://www.rutlandherald.com/article/20101215/BUSINESS/712159886
Published December 15, 2010 in the Rutland Herald
Gas prices highest since 2008
By Bruce Edwards
STAFF WRITER
The cost of filling up the family car isn’t getting any cheaper.
Since September, gasoline prices in Vermont have jumped 46 cents to an average of $3.14 a gallon, according to the state’s December fuel price report.
That’s the highest price since July 2008, when the statewide average hit a record $4.09 a gallon.
Industry officials say prices are the result of a revived world economy, which has driven up demand for fuel products.
But not everyone is convinced supply and demand is the sole factor driving up prices.
Rep. Peter Welch, D-Vt., and others remain convinced that speculators in the commodities futures market play a significant role as well.
Gas prices Tuesday afternoon in Vermont ranged from a low of $3.03 a gallon at three stations in Springfield to a high if $3.22 at the Citgo station at Shelburne Road and Bacon Street in Burlington, according to VermontGasPrices.com, which tracks gasoline prices reported by consumers.
The cost of home heating oil is also getting more expensive with the arrival of cold weather.
The state’s fuel price report found that heating oil has increased to an average of $3.04 a gallon, a jump of 14 cents a gallon from November and 38 cents a gallon higher than a year ago.
Diesel car and truck owners are paying even more to fill their tanks. Diesel is up 18 cents a gallon this month to an average of $3.41 a gallon.
Joe Choquette of the 90-member Vermont Petroleum Association said the spike in gasoline prices reflects supply and demand.
Choquette said this year will set a record for consumption of crude oil and “the reason for that is growth in China.”
He said while the U.S. economy remains in the doldrums there has been an uptick in diesel consumption and refineries are producing more gasoline.
Joe Merone of Midway Oil in Rutland said one factor comes to mind to explain the bump up in prices.
“The only thing we see, No. 1, is a turnaround in the economy,” said Merone, whose company supplies gasoline to 44 Mobil, Irving and Gulf stations. “To my knowledge, there’s no shortage of gasoline; there’s no refineries burning down and all the other reasons that normally spike product.”
John Felmy, the American Petroleum Institute’s chief economist, said crude oil accounts for 60 percent to 70 percent of the cost of a gallon of gasoline. He noted the price of crude oil jumped recently from $80 to more than $89 a barrel.
“With a limited supply and continuing growth in demand, you see a market that is very tight and the price has been increasing,” Felmy said.
The commodities trading market has been singled out by Welch and the Vermont Fuel Dealers Association as a major factor in the spike in fuel prices. But Choquette said “there’s nothing going on in the world market that isn’t explained by supply and demand.”
Welch said some leading economists agree that supply and demand alone doesn’t explain the most recent spike in prices. He said the futures market should ensure price stability for local fuel oil dealers and other businesses like airlines, that need to lock in prices for future delivery. Instead, Welch said, the futures market has become a “speculative casino” for hedge funds and others who never take delivery of the product.
The financial reform bill signed into law this year contains provisions designed to add transparency and accountability to the futures market. But Welch said the law doesn’t go far enough.
“I’ll be introducing legislation in the new Congress to prevent unfair manipulation of prices,” he said.
Welch intends to close a loophole that allows speculators to avoid current trading limits on contracts by shopping individual commodities markets. “My legislation would create transparency by aggregating all the contracts,” Welch said.
Merone, who said he doesn’t always side with Welch, agreed that futures trading plays a role in driving up prices.
“He’s got a point there,” Merone said.
The current Vermont price for regular gas reflects a national trend with prices jumping an average of 10 cents a gallon in the last week alone to $2.96 a gallon, “the highest average since October 2008 and 32 cents per gallon above last year at this time,” the federal Energy Information Administration reported.
In its Dec. 8, weekly report, the EIA attributed the escalating prices on lower inventories of fuel stocks and increased demand.
The EIA said inventory has dropped below five-year average levels “to about 10 million barrels for gasoline after running close to 29 million barrels at its peak in mid-September.” Heating oil stocks have also declined, from 38 million barrels in August to 22 million barrels.
Gas prices highest since 2008
By Bruce Edwards
STAFF WRITER
The cost of filling up the family car isn’t getting any cheaper.
Since September, gasoline prices in Vermont have jumped 46 cents to an average of $3.14 a gallon, according to the state’s December fuel price report.
That’s the highest price since July 2008, when the statewide average hit a record $4.09 a gallon.
Industry officials say prices are the result of a revived world economy, which has driven up demand for fuel products.
But not everyone is convinced supply and demand is the sole factor driving up prices.
Rep. Peter Welch, D-Vt., and others remain convinced that speculators in the commodities futures market play a significant role as well.
Gas prices Tuesday afternoon in Vermont ranged from a low of $3.03 a gallon at three stations in Springfield to a high if $3.22 at the Citgo station at Shelburne Road and Bacon Street in Burlington, according to VermontGasPrices.com, which tracks gasoline prices reported by consumers.
The cost of home heating oil is also getting more expensive with the arrival of cold weather.
The state’s fuel price report found that heating oil has increased to an average of $3.04 a gallon, a jump of 14 cents a gallon from November and 38 cents a gallon higher than a year ago.
Diesel car and truck owners are paying even more to fill their tanks. Diesel is up 18 cents a gallon this month to an average of $3.41 a gallon.
Joe Choquette of the 90-member Vermont Petroleum Association said the spike in gasoline prices reflects supply and demand.
Choquette said this year will set a record for consumption of crude oil and “the reason for that is growth in China.”
He said while the U.S. economy remains in the doldrums there has been an uptick in diesel consumption and refineries are producing more gasoline.
Joe Merone of Midway Oil in Rutland said one factor comes to mind to explain the bump up in prices.
“The only thing we see, No. 1, is a turnaround in the economy,” said Merone, whose company supplies gasoline to 44 Mobil, Irving and Gulf stations. “To my knowledge, there’s no shortage of gasoline; there’s no refineries burning down and all the other reasons that normally spike product.”
John Felmy, the American Petroleum Institute’s chief economist, said crude oil accounts for 60 percent to 70 percent of the cost of a gallon of gasoline. He noted the price of crude oil jumped recently from $80 to more than $89 a barrel.
“With a limited supply and continuing growth in demand, you see a market that is very tight and the price has been increasing,” Felmy said.
The commodities trading market has been singled out by Welch and the Vermont Fuel Dealers Association as a major factor in the spike in fuel prices. But Choquette said “there’s nothing going on in the world market that isn’t explained by supply and demand.”
Welch said some leading economists agree that supply and demand alone doesn’t explain the most recent spike in prices. He said the futures market should ensure price stability for local fuel oil dealers and other businesses like airlines, that need to lock in prices for future delivery. Instead, Welch said, the futures market has become a “speculative casino” for hedge funds and others who never take delivery of the product.
The financial reform bill signed into law this year contains provisions designed to add transparency and accountability to the futures market. But Welch said the law doesn’t go far enough.
“I’ll be introducing legislation in the new Congress to prevent unfair manipulation of prices,” he said.
Welch intends to close a loophole that allows speculators to avoid current trading limits on contracts by shopping individual commodities markets. “My legislation would create transparency by aggregating all the contracts,” Welch said.
Merone, who said he doesn’t always side with Welch, agreed that futures trading plays a role in driving up prices.
“He’s got a point there,” Merone said.
The current Vermont price for regular gas reflects a national trend with prices jumping an average of 10 cents a gallon in the last week alone to $2.96 a gallon, “the highest average since October 2008 and 32 cents per gallon above last year at this time,” the federal Energy Information Administration reported.
In its Dec. 8, weekly report, the EIA attributed the escalating prices on lower inventories of fuel stocks and increased demand.
The EIA said inventory has dropped below five-year average levels “to about 10 million barrels for gasoline after running close to 29 million barrels at its peak in mid-September.” Heating oil stocks have also declined, from 38 million barrels in August to 22 million barrels.
The article was missing recommendations on how to save on gas, there is an outfit called
ReplyDeleteMyGasDiscount.info, I joined them (it doesn't cost anything to join) and then when I fill up,
I keep the receipt and mail it in to get a 50% rebate on the amount I spent for gas. However,
there is an upper limit that you can do each month I think it is $200 or something like that -- but
believe me an extra couple of hundred bucks a month gives my family our weekly trip to the
movies again... or you can always buy more gas.. LOL