The nationwide average price for a gallon of regular gasoline moved down by just 0.1 cents last week, according to a survey of gas stations by AAA. The decrease wasn't enough to provide much relief for drivers watching their budgets. CNN Money reports, "Since gas prices slumped to a low of $1.616 per gallon on Dec. 30, they've jumped more than 20%. At their current rate, prices could easily eclipse $2 per gallon."
The jump comes despite a decline in the price of the crude oil used to make gasoline. USA Today reports, "Oil prices, despite a Friday rally, have fallen about 16% over the same period."
Why is the price of gas going up if the price of oil is going down? Because, USA Today explains, refineries have cut production, not wanting to be caught with a surplus during a recession while demand is shrinking. As of Feb, 6, the amount of oil each refinery was processing had reached its lowest point in "17 years, not including hurricane-related slowdowns, according to the Energy Information Administration."
The AP explains, "Refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher gas prices."
There is at least some good news for consumers. Beutel tells CNN "Because of lower demand, prices are unlikely to return to their sky-high levels from last year..."I think this market is going to have a very tough time getting over $2.35 [per gallon of unleaded by Memorial Day] just because there are so many people out of work and the economy is having such as difficult time going forward," he said.
Others see the price going higher, but still nowhere near last year's $4/gallon mark. Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, told the AP, "We're going definitely over $2, and I bet we'll hit $2.50 before spring."
The last time gas prices peaked, sales of trucks and SUVs plummeted while sales of fuel-efficient small cars rose. This time, however, even the small cars aren't selling - and automakers are slashing prices on everything on their lots to try to spur a rebound. It might be a great time to consider a more fuel-efficient car before the spring gas price spike gets here. Research the best car deals with U.S. News' car rankings and reviews.
