Gas Price Roller Coaster – What’s Causing It?
The elevator ride that is gasoline pricing continues its up and down movement, making for a very unusual spring for drivers.
On the one hand, expensive summer formula gas is coming into the New Jersey, however, on the other hand, volatile crude prices, caused in part by a glut of crude, continue to tug pump prices downward.
"This is a very unusual year," said Tom Kloza, global head of energy analysis for Oil Price Information Service in Wall Township.
Kloza said April is generally a very uneven month. For example, the current average for a gallon of regular gasoline in New Jersey is $2.15, but Kloza said motorists can still find a few dozen pricing points below $2.
One month ago, gas was selling for $2.26 a gallon in New Jersey, according to figures from newjerseygasprices.com.
Nationally, a gallon of regular gasoline is selling for $2.39. Kloza said not only is that cheap for the month of April, but it's also the cheapest gas has been since 2003, notwithstanding the recession in 2009.
Kloza said crude oil prices continue to slide up and down.
"Today they are up $2 and they were down $2 on Thursday or Friday. And I think they will continue to gyrate wildly. They were down basically because of the Iranian nuclear deal, even though that really won't impact the market until 2016, at the earliest."
He added that crude oil prices should remain generally low throughout April.
"Everyone recognizes that these prices for crude oil are unsustainable - that most of the crude in the world costs more than $50 to produce. But everyone also recognizes that we have got an incredible glut. So the next five weeks could see incredibly low prices, even though the next five years could see much higher (prices) than we are at the moment."
On the demand front, Kloza said it was up about 5 or 6 percent in January, and it was flat in February, thanks to the winter weather. "Now we have had a couple of weeks of pretty strong demand, but after this week, there is really no catalyst (for higher demand) until the driving season on Memorial Day.
Motorists are also putting a dent in gasoline demand by replacing cars and trucks with models that get much better gas mileage, according to Kloza.
So how long will drivers in New Jersey continue to get a break on gas prices?
"Take a look at where prices were last year and subtract about $1.20. That is where we are right now. And I think that is going to be the rule of thumb now through August."
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