An Iowa Department of Agriculture analyst who predicted in December that gas prices would continue to drop says he has been surprised by the way prices have continued to go up in the last month. Harold Hommes says conditions have changed and the latest fuel survey showed the fifth consecutive week where prices went up.
“The biggest thing that I can find is that there seems to be a whole lot of turnaround, or that is scheduled industry shutdowns for routine maintenance and repairs. And a couple of those were unscheduled, and that really surprises people when that happens,” Hommes says.
“And I think we are really chasing some limited supply out there right now.” Hommes made his prediction in December when gas started moving up and he thought a good supply would keep it from moving higher. There’s evidence on both sides now that gas should or shouldn’t be going up.
“You can look up an see inventories that are less than where we were at a year ago, but only slightly. February is not a peak driving month by a public demand perspective. So, there’s a lot of numbers you could look at and say really this is kind of hard to justify,” Hommes says.
“Other numbers — when you look at turnaround and production that has come off line — then you can say maybe it is warranted. There’s two sides of every coin I guess.” The upturn in prices came after a lot of areas in Iowa saw gas drop below $3.00 a gallon, which Hommes says makes the continued increases even tougher to take.
“We certainly do like to see a two as the first number when we pull in,” Hommes says. He says it’s a worry when we see a three and then the first number in the price keeps getting closer to being a four. The four-dollar gas fear could be realized as the year moves on.
“I don’t see that coming in the near future,” according to Hommes,”but we’re probably going to get there as summer proceeds.” The DNR fuel survey released midweek showed the average price of a gallon of gas had gone up 15 cents from the previous week to $3.74 a gallon. The price is just three cents below the national average.