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Wednesday, April 7, 2010 as of 11:14 AM ET

Economy

Brooks Blanton

Atlanta, GA

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Could We See $4 Per Gallon Soon?

June 10, 2009 - 10:00 AM | by: Brooks Blanton

If you own a car, you no doubt have noticed that the cost of gas is going up quickly. The national average for a gallon of gas has jumped almost a dollar since the end of last year, from $1.61 in December to $2.62 today. Many are scratching their heads trying to figure out why gas is spiking while demand for fuel remains low.

Tex Pitfield, former President and CEO of an Atlanta-based fuel company, is now a consultant and analyst in the gas and oil industry. Pitfield says the price you pay at the pump is being driven by investors in the oil market and gas refineries cutting back production–forcing supplies to dip and profits to rise.

“Right now we are facing higher gasoline prices because there is just less supply within the system and the refineries are trying to make as much money as they can because their production is less,” Pitfield said in an interview with Fox News.

Pitfield calls refinery production cutbacks, combined with oil investors driving up the cost of a barrel of crude, a bank-breaking mix for consumers. Speculators, looking to make a profit on a global economic recovery, are snapping up oil futures, forcing the price of a barrel of crude to double in just six months. They’re looking to profit tomorrow and you’re paying the price today.

“The stock market is going higher and that is going to drag crude higher. It wasn’t supposed to break $60, then it wasn’t supposed to break $65, now it’s on the edge of $70 per barrel,” he said. “I wouldn’t be surprised to see it beyond $100 before long.”

Pitfield says many factors are playing a role in what we pay to fill our cars up. In addition to the rising cost of crude and refinery cutbacks, add in state and federal taxes, transportation costs, chemical additives for summer or clean burning blends and gas station mark-up.

He predicts that gas prices will skyrocket above last summer’s record breaking prices of $4 per gallon by 2010, even sooner if the Gulf of Mexico Hurricane season produces even one strong storm this summer. A looming price run-up he believes will be permanent this time around. All the more reason, he says, to make fuel efficient cars and alternative energy sources a priority.

“People can’t afford it, the economy can’t afford it and it’s already putting us in a world of hurt and it’s going to get worse. America doesn’t get it–the days of the behemoth SUV is gone. And if it’s not gone, it needs to be gone.”

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