The mainstream media loves a headline, especially one with a purported “expert” touting $6 gas prices by the summer time (last year’s $6 prediction, this year’s $6 call “by Spring!”) to get you to “stay tuned” across a commercial break or click their link. Writers and anchors, the sheep they are, always repeat the common refrain of the coming increasing gas prices in the “summer driving season”. While gas consumption may increase in the summer, which is logical (and a predictable trend), wouldn’t you think capacity utilization and output would anticipate such increases and keep the supply/demand curve in lockstep? The only thing that would prevent that is if refining capacity were constrained. While that may have been a culprit in 2008, this past year, the US was a huge EXPORTER of gasoline and refined derivatives. How much so?
Gas and Distillates were our single largest export in 2011!
That’s right, we sold more gas derivatives than wheat, cars and whatever other good or commodity you can imagine.
So, if you’re going to tell me there’s a shortage of refining capacity in the US while our largest export is what they’re refining, I have a bridge to sell you.
4 Year Gas Price Chart
Why Does It Matter?
Well, media messages influence behavior and decisions. On one hand, I had previously said people should stop whining about gas prices, which pissed off a fair number of people, but I stand by the premise. Cost of living matters, but if gas prices rising 20 cents versus falling 20 cents make or break your family vacation budget (aside from the fact that perhaps your vacation your budget is too reliant upon gas prices), I wouldn’t blindly listen to “expert” predictions and the media for what gas prices are going to do this summer. As the past few years have demonstrated, actual gas prices in the US are pretty random. And if you are sensitive to gas prices in your personal or business budget, it’s very simple to hedge your gas prices like I do all year round.
Oil prices obviously play a substantial role in the price of refined gasoline, but oil prices are quite volatile and random as well. Of course, if the Middle East blows up in turmoil over Iran, the purported experts will say, “I told you so”. If oil stays in the $100-$120/barrel range for the rest of the year and gas prices don’t increase, they’ll be nowhere to be found.
Do Gas Prices Influence Your Plans or Behaviors?
Does It Surprise You That the US is HUGE Exporter of Gas and Jet Fuel and That Prices Don’t Always Rise in Summer?