AVERAGE PRICES SURGE 15¢ IN 2013’S FINAL WEEKS
The price of a gallon gas spiked at the end of 2014, according to the weekly gas price survey from the Energy Information Administration. The EIA report shows the price of a gallon of regular unleaded jumped over 6¢ per gallon in the last week of December, ending the month the same way November concluded: with a shockingly high rise consumer costs. December’s month-end price spike was lower than last month, but the national average for a price of a gallon of gas, now at $3.33, is fully 15¢ higher than the low point on November 18 and 5¢ above where December started.
MIDWEST PUMMELED BY ICE STORMS AND HIGHER COSTS
The news across the Midwestern states has been dominated by the ice storms that ravaged the area during the past week, but the soaring cost of gas added insult to injury in the region. The price of gas hit $3.26 per gallon during the past week, up more than 10-cents from the previous week. While regular pricing volatility in the region has been known to cause wild price swings, the supply disruptions caused by winter storms has not helped the situaton.
Ice storms may have been partly to blame for a power outage at an ExxonMobil refinery in Joliet, Illinois; and MLive.com is also reporting this week that there were problems at a Phillips 66 refinery in Roxana, Illinois. The refinery issues in Illinois are believed to have been a significant factor in a consumer pricing lurch in Michigan, where the average price of gas soared more than 16¢ per gallon during the past week, the highest of any U.S. state.
TAXES, POLITICAL STRIFE AND TRAIN ACCIDENTS ADD TO WOES
A spate of year-ending issues are adding to the maelstrom of gas price hikes, including growing political problems overseas, particularly in South Sudan, where major oil pipeline supplies have been disrupted. That has caused Brent Light Sweed crude to soar in the past month, and that has also dragged the price of West Texas Intermediate crude with it.
The year end tax question also provides a partial answer to why fuel prices are leaping through the proverbial roof. Petroleum distributors and oil companies have to pay taxes on the supplies they have in stock at the end of the year, so supplies begin to evaporate ahead of the new year. Pricing generally peaks in the first week of January, following such a supply choke hold, only to fall by the middle and later part of the month.
Unfortunately for drivers, a crude oil supply train in North Dakota derailed and exploded Monday, with about 20 cars believed to have caught fire and burned, according to a spokesman for the BNSF Railway Company. The oil train derailed shortly after 2 p.m. Monday, forcing an evacuation of nearby Casselton, North Dakota. No injuries or deaths were recorded.
It is unknown how the North Dakota train accident will impact crude oil prices going forward, but the futures markets have been particularly sensitive in recent weeks to supply problems. The Sudanese situation, coupled with continuing political and civil strikes in Libya, have caused Brent to reach highs not seen since March 2012, while the WTI has traded above $100 per barrel during recent sessions.
Brent closed Monday at $111.21 after edging closer to the $113 per barrel mark in recent days, while WTI finally came down slightly, closing at $98.64 per barrel Monday.