(WXYZ) – Gas prices have been rising in Michigan and the country over the past few weeks, and with winter weather in the south, prices will continue to rise.
According to GasBuddy, prices could rise by 10-20 cents per liter over the next two weeks as millions of barrels of refining capacity in the south offline went down. It could raise prices to $ 2.65 to $ 2.75 per liter, which will be the highest seasonal prices in more than five years, and the highest prices since 2019.
“The sooner refined refineries can get online again, the better and perhaps less painful for motorists than if they stay out of service even longer,” said Patrick De Haan, head of petroleum analysis at GasBuddy. ‘Oil prices have continued to rise as global oil demand recovers from the worst COVID-19 pandemic, and now motorists can only take a breather due to the extreme cold weather shutting down refineries. We will probably not see much, if any relief, any time soon. ”
GasBuddy analysis found that 11 refineries in Texas and one in Kansas were at least partially closed due to the extreme cold weather. Very few refineries in the south have protection against the temperature as in the north.
‘Expect gas prices to rise closer to the markets that serve these refineries, especially Texas, Louisiana, Alabama, Mississippi, Florida, Georgia, the Carolinas, and possibly even to the coast, as the colonial pipeline transports refined products from the refineries concerned. as far as New Jersey. While other regions are also likely to have an impact on gas prices, the amount may be slightly less, ”said De Haan. “Even after this event is over, it could take refinery days or even a week or two to be fully operational again, and with demand for petrol likely to accelerate as we approach March and April, price increases may not be rapid. do not fade. “
There have also been myths circulating on social media about rising gas prices. We spoke to DeHaan to dispel some of the myths.
Myth 1: Gas prices rise as Joe Biden is elected president
Prices are not rising because ‘X’ was chosen, they are rising because US and global oil demand is rising and because OPEC and other oil producers lowered oil production last year. As countries see COVID improvements, demand rises faster than supply increases. OPEC has not yet agreed to pump more oil, so the oil price is higher and this pushes the gas price higher. This is exactly why gas prices fell last spring (lower demand as COVID hit) then dropped to $ 2.12 per liter in the summer from $ 1.74 per liter in May. Biden’s policy and decision to cancel Keystone XL could affect prices from now on, but not now, as existing pipelines are not even being filled due to the ever-lowering demand against pre-pandemic, and oil companies making more than $ 50 in 2020 billion, do not even want to drill on federal or private land at the moment – if they increase production, it is from existing wells.
Myth 2: Gas goes up to pay for new stimulus checks
The government is not a major winner with rising prices. Leases for federal land and royalties are determined.
Myth 3: Why did gas prices rise even before the Texas weather?
Because the improvement in demand over the past few months is related to the case of COVID cases, Americans feel more comfortable getting out and refilling more frequently.
Myth 4: Have prices risen due to plans to close pipelines?
No – they have risen because demand is recovering and oil production remains low because OPEC and oil producers were hammered out in 2020 and are not back in production quickly to see if demand can maintain the rebound.
Myth 5: Now that more people are driving the vaccine, gas companies have decided to raise prices to make more money
Oil companies do not set prices – that is how and why oil has fallen so sharply this past spring – in negative areas. Markets determine oil prices, just as markets determine the value of your home, prices are determined based on what a seller and buyer are willing to pay. Oil companies sell at whatever price – high or low.