While pump prices fell a few cents in recent days, there are persistent rumors Iowans will be paying more than $4 a gallon for gasoline by summertime. Gregg Laskoski, the senior petroleum analyst at GasBuddy.com, believes those rumors will prove true.
Laskoski expects gas prices to hit $4.10 or $4.15 a gallon by June or July. “The situation in the Middle East with Iran is the culprit,” Laskoski says. “There’s no question that’s a factor right now, but even if that weren’t occurring, I think there would be a very good likelihood that we would be seeing this movement toward that $4 price threshold because of what we’ve seen for the last seven years.”
Laskoski says anytime gas prices go up at the start of a new year, it’s a signal that trend will continue. In the past, when prices have skyrocketed, drivers did what they could to conserve fuel and buy more efficient vehicles. He says individual fuel consumption has nothing to do the rise in price. He says the consumption factor fell out of the equation a long ago.
“The single biggest factor we’ve seen for years has been speculation in the commodities market,” Laskoski says. “If you go back to 2008 when we saw gasoline reach an all-time high and crude oil hit the peak of $147 a barrel, it wasn’t because Americans were driving any more. It was because there was wild speculation that was fueled by the weakness of the U.S. dollar.”
When oil is traded overseas, it is exempt from U.S. regulations. Laskoski says there is no “common sense regulation” in the commodities market. He agrees with reports that consumption is down but not because drivers are cutting back. He says more people are unemployed and have no jobs to drive to.
“We are driving fewer miles,” he says. “I think that has more to do with a reflection on the economy. It’s the higher unemployment that is probably contributing the greatest to the reduction in miles driven.” Laskoski says TransCanada’s Keystone X-L oil pipeline could shake things up.
The proposed $6-billion pipeline would stretch from Canada to Texas, going through several states, including Nebraska. “Keystone has the potential to be a game-changer as far as bringing crude from Canada into the U.S.,” he says. “Anytime the U.S. can get its supplies of oil and gasoline, the fuel we need from North America rather than the Middle East, that’s a positive thing.”
Progress on the proposed pipeline has ground to a halt as concerns rise about its potential impact on environmentally-sensitive areas.