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July 2, 2013

Gas Prices Down Prior to July 4 Holiday


In a remarkable departure from the precedent set by significant increases shortly before Labor Day, gas prices around the nation are dropping in the run up to Independence Day. It appears the reason for price trends relates directly to the elimination of the factors that pushed it higher one short month ago – as opposed to a simple supply/demand calculation. According to Fox Business:

“AAA spokesman Michael Green said Monday the national average has been on the decline for nearly three weeks running. Gas prices had previously been on the rise as a result of regional supply disruptions in May and early June, first in the Northwest and then the Midwest.

Despite the recent reprieve, prices traditionally rise as summer demand heats up. The national average climbed 17 cents a gallon in July 2011 and 16 cents in July 2012, Green noted.”

This difference is particularly apparent in Michigan, which was among the Midwest states hardest hit by the sharp increase in prices in late May. The Mining Gazette reports:

Michigan gasoline prices have dropped 80 cents per gallon in less than a month, just in time for the Fourth of July travel season.

According to AAA’s daily fuel gauge report, today’s state-average price of $3.43 per gallon is the lowest in a steady stream of price declines from $4.23 on June 6.

“The last couple months there have been major issues at two of the bigger refineries,” said Nancy Cain, spokesperson for AAA Michigan. “They’ve been back online, and we started seeing prices dropping. There’s no issues right now at any of the refineries.”

If nothing else, the current decrease in prices illustrates clearly just how significant price shocks are in determining the prices at the pump for millions of Americans. Consumers and small business owners alike would be wise to keep this lesson in mind in the future.

Filed under:Causes and Solutions,Gas price | by Eyes on Energy @ 10:41 pm | 

June 17, 2013

Rising Tensions in Syria Inch up Prices


In a change from the precedent set over the past several months, the Obama Administration determined late last week that the Syrian government of Bashar Al-Assad crossed a “red line” by using chemical weapons against opposing rebels. CNN Reports:

Syria has crossed a “red line” with its use of chemical weapons, including the nerve agent sarin gas, against rebels, a move that is prompting the United States to increase the “scale and scope” of its support for the opposition, the White House said Thursday.

The acknowledgment is the first time President Barack Obama’s administration has definitively said what it has long suspected — that President Bashar al-Assad’s forces have used chemical weapons in the ongoing civil war.

“The intelligence community estimates that 100 to 150 people have died from detected chemical weapons attacks in Syria to date; however, casualty data is likely incomplete,” Ben Rhodes, the deputy national security adviser for strategic communications, said in a statement released by the White House.

However, the conflict in Syria continues to be a source of geopolitical tension. Russian President Vladimir Putin responded to the US announcement by warning them not to support the rebels. Again from CNN:

Russian President Vladimir Putin warned the West on Sunday against arming Syrian rebels “who kill their enemies and eat their organs,” referencing a widely circulated video that purports to show a rebel fighter eating the heart of a dead soldier…

“I believe you will not deny that one should hardly back those who kill their enemies and eat their organs. … Do you want to support these people? Do you want to supply arms to these people?” Putin asked, speaking to reporters in London after meeting with British Prime Minister David Cameron.

Already, this is having serious implications for domestic gas prices. Syria’s proximity to nearby centers of oil production – along with its remarkably close ties with the state of Iran – makes it a focal point for potential price disruption. According to Access North GA:

Although Syria is not a major oil-producing country, it does boarder Iran and Iraq which produce about one-fifth of OPEC’s oil output. The value of the dollar fell last week, providing further support for the increase in oil prices…

“Motorists shouldn’t be surprised to see retail gas prices creep higher this week as tensions in the Mideast increase and create concerns of supply disruptions,” said Jessica Brady, AAA spokeswoman, The Auto Club Group. “Although pump prices are higher now than they were this time last year, the Energy Information Administration expects the summer average price for a gallon of regular retail gas to average $3.53, about the same as last year.”

While there are other encouraging signs for US drivers, it is imperative to keep in mind the very real possibility that international conflict could have on prices at the pump.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 1:00 pm | 

June 12, 2013

The Worst May Be Over for Midwest Drivers


After weeks of pain brought on by a number of ill-timed refinery maintenance efforts, drivers in the upper Midwest may finally be seeing the light at the end of the tunnel. According to, analysts project that the refineries in question are set to resume production at their normal levels shortly:

Analysts said one major Illinois refinery is back online and another big one in Indiana is on track to ramp up production again soon. The refineries’ ongoing maintenance — which led to reduced supply and higher prices — are the primary culprits for the surge at the pump.

“On balance I think the worst is over,” Tom Kloza, chief oil analyst at, said Tuesday. provides the data for’s Gas Gauge which shows that many stations are already lowering prices.

Exxon Mobil’s refinery in Joliet, Ill., was offline longer than expected, he said. Assuming there are no hiccups with BP’s plans to soon restart a crude unit at its refinery in Whiting, Ind., prices could drop below $4 a gallon within weeks throughout a five-state region stretching from Wisconsin to Ohio, according to experts.

“You just have one refinery issue after another. As they’re coming back on, that should be a big thing,” said Phil Flynn, chief energy analyst at Price Futures Group in Chicago.

However, consumers in Michigan still face some of the highest prices in the nation. Local news in Detroit reports:

“…gas prices are still averaging almost $4.18 for the state and $4.16 for the Detroit area. That’s over 50 cents more than the current national average of $3.64.

According to the website, Michigan currently has the third highest gas prices for any state in the country, behind only Hawaii and Illinois. The website also list Detroit, Ann Arbor, Kalamazoo, Lansing and Grand Rapids as all being in the top ten list of cities with the highest gas prices in the country.”

Allegations of price fixing and market tampering run rampant – but regardless it’s clear that consumers are still at the whim of extraordinary events and price shocks. As Gulf braces for a new hurricane season, it seems entirely likely that refinery shutdowns will remain an ongoing concern.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 1:59 pm | 

May 22, 2013

Minnesota Senator Blames DoE for High Prices


Minnesota Senator Al Franken, whose state has suffered from record gas prices in the run up to Memorial Day weekend, has placed the blame for this spike in part on the Department of Energy. Senator Franken argues that the DoE’s decision to stop publishing refinery maintenance reports made it impossible to coordinate scheduled shutdowns in a way that would minimally disrupt prices at the pump. The Duluth News Tribune writes:

“The reports, authorized under the 2007 Energy Independence and Security Act, were intended to help oil companies avoid shutting down multiple refineries in the same region of the country at the same time. The department stopped publishing the reports and collecting data from refineries in 2011, citing a reduction in funding, Franken said.

Franken, D-Minn., challenged Adam Sieminski, head of the Energy Information Administration, about the issue in a hearing Tuesday after Sieminski acknowledged that simultaneous refinery shutdowns were contributing to the price spikes.

‘Gas prices in Minnesota have gone up in a startling way,’Franken said. ‘And the spike is related to multiple refinery outages in the Midwest.’”

Meanwhile, there is little relief in sight for consumers in the Midwest. The following chart from illustrates exactly how much these refinery shutdowns have wreaked havoc on prices over the last week alone.

With the Memorial Day weekend fast approaching, all too many drivers will likely continue to feel the pain of high prices for the foreseeable future.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 12:34 pm | 

May 20, 2013

Continued High Prices Result in Varied Responses


As much of the Midwest suffers from the persistent high prices caused by several refinery shutdowns earlier in the month, lawmakers and motorists alike have adopted a variety of ways to cope.

In Minnesota, where prices recently rocketed to all time highs, state legislators have taken it upon themselves to prevent future outbreaks. According to ABC News in Minneapolis-St. Paul:

“The uptick prompted Senator Amy Klobuchar (D-MN) to send a letter to Secretary of Energy Steven Chu on Thursday urging him to examine the timing of the closures.

Sen. Al Franken (D-MN), who introduced legislation last year to eliminate excessive oil speculation that drives up gas prices, released a statement saying he’s working with the Department of Energy to explore ways to avoid multiple closures like this in the future.”

However, motorists are simply trying to go about enjoying their Memorial Day vacation plans. In Sioux Falls, South Dakota, local news sources report:

Cross-country traveler John Pietkiewicz said ‘You’ve got to pay [the higher prices]. You think more in terms of I’m glad that I have a vehicle that’s relatively fuel efficient.’

Marilyn Buskohl, AAA said: ‘I don’t really foresee that it will really affect travel. I really think that people are people are unfortunately having to get used to the high prices and I think they just somehow make it work.’

And some travelers agree, they are not going to let the increase in prices stop them from keeping their vacation plans intact.”

With no end in sight to these still increasing prices, it is certain that consumers and fleet managers alike are feeling the summer squeeze.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 4:25 pm |