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Gas Prices Rise as New Year Sinks In

Those who pay close attention to energy prices are familiar with the cyclical nature of oil and gas prices. Prices rise as demand increases in the spring and summer, then fall in the autumn and winter. This is to be expected.

What is somewhat surprising, however, is how energy prices are already increasing through the month of January.  The below chart illustrating the futures market for oil and gas hints at some unusual results:

This chart shows what the forward price curve for energy prices were as of the 15th of each respective month. Clearly, it shows a decline in forward prices throughout the fall. However, the most recent curve from this January suggests that forward prices have already bottomed. Generally this kind of pattern would not emerge until later in the spring. While this almost certainly will lead to higher prices for consumers, it is worth noting that the forward price curve remains significantly lower than it was in the April of 2010.

In fact, Americans are already feeling more pain at the pump than usual. According to the LA Times, analysts for the the popular gas-hunting smartphone application “Gasbuddy” have made the following predictions about energy prices in 2013:

  • “The value of the U.S. dollar over the course of the year: ‘When the dollar loses value, crude oil climbs higher and Americans pay more for gasoline.’
  • Uncertainty over the level of U.S. fuel exports in 2013: ‘As of January 2013, the Energy Information Administration reports that exports have risen 217% in the last 10 years, most recently rising to nearly three million barrels per day. The amount of products exported amounts to over 16% of what Americans consume everyday.’
  • The effects of hurricanes that may threaten fuel infrastructure along the Gulf Coast and the Eastern Seaboard: ‘Hurricane season has brought significant harm to oil infrastructure in the last decade, and while hurricanes are not guaranteed to impact such facilities, such an event could interrupt notable infrastructure.’
  • The dependability of the nation’s refineries after several problems in 2012: ‘We’ll also see whether refineries have sufficiently addressed the weaknesses that were exposed last year.’”

If these predictions are accurate, it could mean a significant increase in prices at the pump for the year. According to one Gasbuddy analyst, “‘The saying goes that all you can be sure of in life is death and taxes. I’d add the seasonal run-up in fuel prices every spring as something I’m sure of in life.’”

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