(WSYM) — Gas prices have been going up across Michigan and the country over the last few weeks, and with the winter weather in the south, prices will continue to rise.
According to GasBuddy, prices may jump 10-20 cents per gallon over the next two weeks as millions of barrels of refining capacity have gone offline in the south. That could push prices to $2.65-$2.75 per gallon, which would be the higest seasonal prices in over five years, and the highest prices since 2019.
“The quicker the affected refineries are able to come back online, the better, and perhaps less painful for motorists than if they remain out of service for even longer,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Oil prices have continued to rally as global oil demand recovers from the worst of the COVID-19 pandemic, and now the extreme cold weather shutting refineries down, us motorists just can’t seem to catch a break. We probably won’t see much, if any relief, anytime soon.”
GasBuddy analysis found 11 refineries in Texas and one in Kansas at least partially shut down due to the extreme cold weather. Very few refineries in the south have protection from the temperatures like they do in the north.
“Expect gas prices to rise more closer to the markets these refineries serve, primarily Texas, Louisiana, Alabama, Mississippi, Florida, Georgia, the Carolinas, and potentially even up the coast, as the Colonial pipeline carries refined products from the affected refineries as far as New Jersey. While other regions are also likely to see impacts to gas prices, the amount may be slightly less,” De Haan said. “Even after this event is over, it may take refineries days or even a week or two to fully return to service, and with gasoline demand likely to accelerate as we approach March and April, the price increases may not quickly fade.”
There have also been social media myths floating around about rising gas prices. We talked 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 elected, they are going up because US and global oil demand is rising and because OPEC and other oil producers cut oil production last year. Now, as countries are seeing COVID improvements, demand is rising faster than supply is rising. OPEC has not yet agreed to pump more oil, so oil prices are up and that's pushing gas prices higher. This is exactly why gas prices last spring went down (lower demand as COVID hit) 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 may affect prices years from now, but not now since existing pipelines aren't even filled due to still lower demand vs pre-pandemic, and oil companies, which lost over $50 billion in 2020, aren't looking to even drill- not on federal land or on private land at this time- if they raise production it would be from existing wells.
Myth 2: Gas is going up to help pay for the new stimulus checks
The government is not a major winner with rising prices. Leases for federal land and royalties are set.
Myth 3: Why were gas prices already going up before the Texas weather?
Because the improvement in demand in the last couple of months related to COVID cases falling and Americans feeling more comfortable getting out and filling up more often.
Myth 4: Did prices go up because of plans to shut down pipelines?
No - they went up because demand is recovering and oil production remains low because OPEC and oil producers got hammered in 2020 and aren't quick to get back into production to see if demand can sustain the rebound.
Myth 5: Now that more people are driving with the vaccine, gas companies decided to rise the prices to make more money
Oil companies don't set prices- which is how and why oil fell so precipitously last spring- into negative territory. Markets set oil prices, just like markets set the value of your home- prices are set based on what a seller and buyer are willing to pay. Oil companies sell at whatever that price is - high or low.