STATEWIDE — Gasoline analysts and Florida industry officials say they don’t see prices going much higher in the short term. But you know what else they say, because the rest of us say it, too:
What You Need To Know
- A GasBuddy analyst says he sees U.S. gas prices nearing their peak
- But an industry official says he sees the return to $4-a-gallon gas within 2 years
- Experts underscore unknown factors such as hurricanes and world events
“Just pray we don’t get any more hurricanes,” said Ned Bowman, executive director of the Florida Petroleum Marketers Association.
In the absence of a significant tropical system or another event that affects supply, gasoline prices nationwide and in Central Florida should peak soon, according to one analyst, or continue to trickle upward over the next couple of years toward $4 a gallon, according to an industry official.
Patrick De Haan, head of petroleum analysis for GasBuddy, which trumpets fuel cost savings and accessibility, likened the U.S. trend of rising gas prices to a baseball game.
“I think we're kind of in the eighth inning, if you will, of the gas-price rally,” De Haan told Spectrum News this week. “I think demand numbers probably won't improve as significantly as they already have, and I think that will keep gas prices mostly in check for the rest of the summer.”
Prices for regular gasoline in Florida stood Tuesday at an average of $2.940 a gallon, up from $2.877 a month ago and $2.023 a year ago, according to AAA.
Why prices have been rising
Analysts attribute the price rise to increased travel and gasoline demand as more people get vaccinated against COVID-19, as coronavirus cases drop and as governments ease safety protocols such as social distancing.
“People are getting out there and going places,” De Haan said.
That has prompted traders and investors to bet on increased demand for gasoline, which has driven up crude oil prices in international futures markets, including the New York Mercantile Exchange.
Prices in those markets largely drive the price of gasoline. The price of the international benchmark, Brent crude, closed Tuesday at $74.81 a barrel, more than 40% higher than a year ago.
Investment bank Goldman Sachs predicts that Brent crude this summer will hit $80 a barrel for the first time since fall 2018.
Regardless, De Haan said, “I don’t know that if I would expect overall demand to rise sharply” from this point.
De Haan said he doesn’t see prices in Florida going “much beyond” $3.05 or $3.10 a gallon as part of the current price rally, as investors call it.
He and other analysts emphasize that it’s difficult to predict the price of gasoline given the prospect of hurricanes, geopolitical tensions and events such as the recent Colonial Pipeline shutdown, all of which can disrupt supply and spark higher prices. A change in the recovery from COVID-19 or a swifter global economic rebound could have dramatic effects as well, he said.
De Haan also noted the possibility of lower gas prices if the Biden administration revives a nuclear agreement that would ease oil-export sanctions on Iran, a major producer.
If traders of oil futures perceive “less supply for some reason, then prices would skyrocket,” said AAA spokesman Mark Jenkins. “If there's the expectation or belief that supply is coming back at a high rate, then that will help suppress prices.”
A longer-term view of $4 a gallon
Bowman, of the Florida Petroleum Marketers Association, said he sees less supply and higher prices in the longer term.
He cites the Biden administration’s suspension of oil-drilling leases in the Arctic National Wildlife Refuge and cancellation of a border-crossing permit for the Keystone XL pipeline, which sought to transport crude oil from Canada into the U.S.
“So now, you're limited on the expansion of new crude oil coming into” U.S. refineries, Bowman said.
He and others noted the access of Tampa Bay and Central Florida to refined gasoline via the Port of Tampa, from where a pipeline runs to Orlando. Gasoline prices throughout Central Florida and Tampa Bay stood below the state average of $2.940 and national average of $3.069 on Tuesday.
Yet down the road, Bowman said, he sees a possible return of $4.00 a gallon, which Florida averaged in July 2008.
He said he doesn’t expect that to happen through the medium term “unless you have some type of crisis where you have a major problem with a refinery or with crude supply. But over the next couple of years, I think you'll see gasoline going toward $4 a gallon.”
In the meantime, he emphasized the problem of hurricanes, which he said can blow prices upward even while they remain at sea.
Why hurricanes can kick up a quick price storm
Spectrum News presented Bowman a scenario in which a tropical depression forms near Mexico’s Yucatan Peninsula, and forecasts say it could hit Tampa Bay and Central Florida within four days.
Bowman said the news of a coming storm would prompt residents to rush to gas stations and fill their tanks, causing the stations to run out of gas and order more. That would send tanker trucks to rush to gasoline terminals and fill up, and that would create perhaps a four-hour wait for those drivers, who must get paid for the extra waiting time, he said.
“People have got to recover their costs, because they’re not delivering the gasoline for free,” Bowman said of gas station owners. “So when consumers say, ‘Here are the gas stations and convenience stores price-gouging again,’ that’s (not) what’s happening.”
But tropical systems can dump different effects on oil futures and gas prices. Take Tropical Storm Claudette, which hit parts of the Southeastern U.S. last weekend.
“What it actually caused was speculation of less demand for fuel because people would be staying home to weather the storm,” said Jenkins of AAA.
Until a hurricane hits, analysts suggested, Central Florida and Tampa Bay drivers have good reason to relax about gas prices. Jenkins noted that current prices aren’t much higher than in 2018 and 2019, which he said saw some of the highest gas prices in recent years.
“It’s just that things are a little exasperated right now,” he said. “Because of the pandemic, things are just a little bit out of flux.”