Gas prices are rising steadily across the United States, but the worst may be yet to come.
January has been a tough month for drivers, as gas prices have been record-setting high. Gas prices are currently 35 cents higher than they were one year ago. Now analysts are saying there will be no relief at the pump anytime soon due to refinery closures in the US and Europe.
Prices rose after the U.S. Department of Energy announced that gas output decreased 2.8 percent last week, to 8.5 million barrels a day – the lowest since February 2010. The U.S. DOE said gas prices could jump later this year as two refineries in the northeast and a refinery in the U.S. Virgin Islands are taken out of service.
There is very little doubt that more refinery closures will impact gasoline supplies and prices. The last time gas prices went this high, demand fell to an 11 year low, and now more refineries are closing, which means prices are going to keep rising.
Why are refineries closing?
According to the Consumer Energy Report, in recent years, demand for gasoline has been down due to high prices in the U.S. As oil prices have climbed, refiners have struggled to pass on all of the increased costs of those higher oil prices to consumers. They would like to sell gasoline for a bit more, but the reduced demand keeps their margins low for the most part. Ultimately some are forced to shut down. That will also mean higher gasoline prices for consumer.