(WXYZ) – Gas prices have been rising in Michigan and the country in recent weeks, and with the winter weather in the south, prices will continue to rise.
According to GasBuddy, prices could rise 10 to 20 cents per gallon over the next two weeks, as millions of barrels of refining capacity have gone offline in the south. This could push prices up from $ 2.65 to $ 2.75 per gallon, which would be the highest seasonal prices in more than five years and the highest prices since 2019.
“The sooner affected refineries can return to the grid, the better and perhaps less painful for motorists than if they remain out of service even longer,” said Patrick De Haan, head of oil analysis at GasBuddy. “Oil prices have continued to rise as global oil demand recovers from the worst of the COVID-19 pandemic, and now the extreme cold that closes refineries, it looks like motorists can’t stop. We probably won’t see much , if necessary, a relief soon ”.
GasBuddy’s analysis found 11 refineries in Texas and one in Kansas at least partially shut down due to extreme cold. Very few refineries in the south have temperature protection as they do in the north.
“Expect gas prices to be closer to the markets that serve these refineries, mainly in Texas, Louisiana, Alabama, Mississippi, Florida, Georgia, the Carolinas and even as far as the coast, as the Colonial pipeline transports refined products from affected refineries as far as New Jersey. While other regions are likely to see impacts on gas prices, the amount may be slightly lower, ”said De Haan. “Even after this event is over, refineries can take days or even a week or two to fully return to service and with the likelihood that gasoline demand will accelerate as we approach March and April, price increases may not go away quickly. “
There have also been myths on social media about rising gas prices. We spoke with DeHaan to discredit some of these myths.
Myth 1: Gasoline prices are rising because Joe Biden was elected president
Prices do not go up because “X” was chosen, they go up because US and global oil demand is rising and because OPEC and other oil producers cut oil production last year. Now, as countries see improvements in COVID, demand is rising faster than supply. OPEC has not yet agreed to pump more oil, so oil prices are rising and this is driving up gas prices. That’s exactly why gas prices fell last spring (demand fell when it affected COVID) and returned from $ 1.74 per gallon nationwide in May to $ 2.12 per gallon during the summer. Biden’s policy and decision to cancel Keystone XL may affect prices in a few years, but not now as existing pipes are not even filled due to even lower pre-pandemic demand and oil companies, which lost more than $ 50 billion by 2020, are not even looking to drill – not on federal or private land – if they increase production would be from existing wells.
Myth 2: Gas rises to help pay for new stimulus checks
The government is not one of the main winners with rising prices. Federal land leases and royalties are set.
Myth 3: Why did gasoline prices already rise before the Texas climate?
Because the improvement in demand over the past two months related to the drop in cases of COVID and Americans feel more comfortable going out and filling up more often.
Myth 4: Did prices rise because of plans to close the pipes?
No, they went up because demand is recovering and oil production remains low as OPEC and oil producers were hammered out in 2020 and are not quickly returning to production to see if demand can withstand the rebound.
Myth 5: Now that there are more people driving with the vaccine, gas companies decided to raise prices to make more money
Oil companies do not set prices – which is how and why oil fell so hastily last spring – in negative territory. Markets set oil prices, just as markets set the value of your home; prices are set based on what a seller and a buyer are willing to pay. Oil companies sell at any price, high or low.