Gas Prices Swing Back Up

In July, oil prices peaked at $147 per barrel of crude oil, sending gas prices to skyrocketing to new highs. But once the world economy began to feel the effects of America’s economic depression, crude oil prices also took a hit bringing them down in the last few weeks to as low as $36 per barrel.

Last week, prices bottomed at $1.74 for a gallon of unleaded gasoline in California, but by Wednesday they were back up at $1.89 in San Francisco—more than a 10 cent increase.

KCBS’ Janice Wright reports

Experts say the sudden upswing can be blamed on several things, including refinery disruptions in California. A key piece of equipment at BP’s refinery in Los Angeles County malfunctioned earlier this month, and on Monday the owner of a Bakersfield gasoline refinery filed for bankruptcy.

“I don’t think that’s going to be a major upturn in itself,” said Severin Borenstein, Director of the University of California Energy Institute in Berkeley.

While the prices of gas may seem to have suddenly increased, Borenstiein thinks we should expect to see gas prices gradually rising as we head toward spring. But unless prices go way up again, he thinks consumers will return to their old gas guzzling habits.

“We’re going to see people generally go back to driving as much as they did a few years ago, buying larger cars that get poorer gas mileage as they did a few years ago.”

On Friday, oil prices rebounded in what some market analysts believed was only a brief pause for steadily declining crude prices.

Awful holiday retail sales, job uncertainty and shrinking global trade all suggest that demand for energy from both businesses and consumers will continue to fall into next year.

At the pump, retail gas prices fell six-tenths of a penny overnight to a new national average of $1.642 a gallon Friday, well below the year-ago average of $2.981 a gallon, according to AAA and the Oil Price Information Service.

(cfu)