(WXYZ) – Gas prices have been climbing in Michigan and the country in recent weeks, and with winter weather in the south, prices will continue to rise.
According to GasBuddy, prices could increase by 10-20 cents a gallon in the next two weeks as millions of barrels of refining capacity went offline in the South. That could push prices up to $ 2.65- $ 2.75 per gallon, which would be the highest seasonal prices in more than five years, and the highest prices since 2019.
“The sooner the affected refineries can get back online, the better and perhaps less painful for motorists than if they are out of service for longer,” says Patrick De Haan, head of petroleum analysis at GasBuddy. “Oil prices have continued to rise as global demand for oil is recovering from the worst COVID-19 pandemic, and with extremely cold weather closing refineries, it seems motorists cannot take a break. We probably won’t see much or no relief anytime soon. “
GasBuddy analysis found that 11 refineries in Texas and one in Kansas were at least partially closed due to the extreme cold weather. Few refineries in the south are protected from the temperatures as in the north.
Expect gas prices to rise closer to the markets these refineries serve, especially in Texas, Louisiana, Alabama, Mississippi, Florida, Georgia, the Carolinas and possibly even coastal as the colonial pipeline carries refined products from those affected refineries as far as New Jersey. While other regions are likely to impact gas prices as well, the amount may be a little lower, “said De Haan.” Even after this event is over, it could take days or even a week or two for the refineries are back in full operation, and as gasoline demand is likely to increase as we approach March and April, price increases will not fade anytime soon. ”
There are also social media myths surrounding rising gas prices. We spoke with DeHaan to debunk some of those myths.
Myth 1: Gas prices are going up because Joe Biden was elected president
Prices are not going up because “X” was chosen, they are going up because demand for oil in the US and the world is increasing and because OPEC and other oil producers cut oil production last year. With countries seeing COVID improvements, demand is growing faster than supply. OPEC has not yet agreed to pump more oil, so oil prices have risen and that is pushing gas prices up. This is exactly why gas prices fell last spring (lower demand due to COVID) and then rebounded from $ 1.74 per gallon nationally in May to $ 2.12 per gallon during the summer. Biden’s policy and decision to cancel Keystone XL is something that could affect prices over years, but not now because existing pipelines aren’t even filled due to still-lower demand versus pre-pandemic, and oil companies, which will exceed $ 50 in 2020 billion lost, don’t even want to drill – not on federal land or private land right now – if they increase production, it would come from existing wells.
Myth 2: Gas goes up to help pay for the new incentive checks
The government is not a big winner with rising prices. Federal land and royalty leases are established.
Myth 3: Why did gas prices go up before the weather in Texas?
Because the improvement in demand in recent months has been linked to COVID cases dropping and Americans feeling more comfortable getting out and refueling more often.
Myth 4: Have prices gone up due to plans to shut down pipelines?
No – they went up as demand is recovering and oil production remains low as OPEC and oil producers were hammered in 2020 and are not going back into production anytime soon to see if demand can support the recovery.
Myth 5: With more people driving the vaccine, gas companies have decided to raise prices to make more money
Oil companies don’t set prices – and that’s how and why oil fell so quickly last spring – in negative territory. Markets determine oil prices, just like markets determine the value of your homes – prices are determined based on what a seller and buyer are willing to pay. Oil companies sell at whatever that price – high or low.