Thanks to an unexpected spike in gasoline inventories, the national average price for a gallon of regular unleaded gas broke $3.10 for the first time in over three weeks.
Unfortunately, this might be where gas prices bottom out (or at least plateau) because the same report that showed a spike in gasoline inventories also showed that refinery output decreased during the past week. As you probably remember, refinery output problems have been the biggest contributor to gas prices jumping well over 40% since the end of January.
There are now 14 states reporting an average gas price below $3 per gallon, which is up from one just two and a half weeks ago. Currently, South Carolina is reporting the lowest state-wide average gas price at $2.90 per gallon, while Hawaii has the highest average gas price at $3.58 per gallon.
It’s pretty amazing how much prices can vary across the country for essentially the exact same product, but we’ll save that topic for another time.
As a side note, I find it pretty interesting that the complaints regarding high gas prices seem to have come to a screeching halt thanks to this rather minor and slow drop in prices.
Think back about a month or so when gas prices were just about to break the $3.10 mark for just the third time ever – it felt like everyone and their mother was outraged at how high gas prices had become, Congress was on the verge of interrogating Big Oil about possible price gouging, and some people were even talking about how $5 gas was in the very near future.
Now that prices are back down to $3.10 (which is only 4% off of the record high set on May 22) it seems like many of us have come to accept gas prices at these levels. It’s enough to make me wonder if we we may have completely overreacted as gas prices were reaching their record highs.
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I bought gas in georgia for .99c in 2004. I though I was the only one outraged by the gas prices. We’ve become so resilient. We complain and then accept, complain and accept so they’ll never stop feeding us crap about what’s really going on.
On a brighter note,..I thought Id share this. Hillarious!!
http://www.shameyourride.com
I agree that this trend probably won’t continue. Give it a few weeks and things will probable be back to where they were or at least on their way back up. This is what happens when we don’t have enough refineries!
It’s unlikely that oil refineries will be built. Oil companies behave rationally, there is unlikely to be any ability to supply more crude to refine, that which there is is heavily bid for by developing countries (especially China), and building a refinery is a massive investment. Besides the hard costs of equipment and land, the soft costs in this day and age (and Country of NIMBY litigants) are ridiculous. If somebody handed me all of BP, I wouldn’t build refineries either. The NPV an IRR calculations would make it an irrational decision.