Speculation Drives Up Gas Prices

By: Meaghan M. Norman Email
By: Meaghan M. Norman Email

The price of gas may be hurting you at the pump, but have you ever though about how much it costs a truck driver to fill up?

"It takes $1,000 to fill it up," said Comstar driver John Watson. "I make sure I don't drive any faster than 62 mpg and that helps a little and I don't idle more than I have to."

"It used to cost around $500 to $600, now it's up to $900 to $1,000," said RMX driver Mark Wratchford. "It's really getting tough."

The drivers tell New Ten that, filling up 300 gallons for a thousand dollars or more can last for just three days, if you're lucky. The cost of diesel is usually always more and industry experts attribute that to high worldwide demand.

It's a commodity that there's not much of as there is gasoline," said Michigan Petroleum President Mark Griffin.

Whether it's diesel or regular, both prices are always influx and based on a lot of what if's.

"If this happens it could cause a disruption in supply so therefore we're trading these futures down the road, [so] we need to charge more for them today," said Griffin.

And the speculation is based in part on the conflict in the Middle East. But Griffin says we can't just blame Libya or other parts of the Middle East.

"This year because of speculation and fear that there's going to be a shortage due to unrest in the middle east, it's caused crude oil to go up faster at a time when typically it doesn't go up. And unfortunately it means higher prices at the pump," said Griffin.

The U.S. imports only 15% of its oil from the Middle East. 85% comes from North America including Canada, the U.S. and Mexico. And the reality is there is no shortage, supply more than meets demand but it's the future, that's the variable.

"I use the acronym SIRF: Speculation, Innuendo, Rumor and Fear that drive up the price of crude oil not what's really going on in the marketplace," said Griffin. "To a certain extent this is a false run up in the price of crude oil."

While it may be a false run because of all the speculation, it certainly doesn't make us any better when filling up.

"You don't cut back, you keep going, you take the hit," said Wratchford.

Another issue is many consumers feel the price at the pump shouldn't have to pay such exorbitant prices but something many people don't know is gas stations are actually losing money at the pump, usually. After it pays for the gas, including the transportation of it and all the fees and taxes associated with it, it tends to lose double-digit cents on the gallon.

"In 2009 the typical gas station in this area sold gasoline at about a 6.5 cent a gallon loss. In 2010 it was about 5.5 cents and it's not unusual to see gasoline sold at a loss because of the competitive pressure," said Griffin. As of March 8, 2011, gas station on average are losing 11 cents.

Gas prices could be going up soon in the months to come. When stations switch to a summer blend, consumer could be paying as much as 5 cents more per gallon.

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