Despite persistently low demand, prices for gasoline have spiked over the past week along with crude oil, threatening one of the very few points of relief for the recession-striken U.S. consumer: cheap gas.
That may be frustrating for consumers with few signs people are driving more now than during what was a dismal summer for the travel industry. People aren’t buying much gasoline.
I wish it could go down under $2, said Cheryl Couture, 50, who was filling up at a Speedway station in Columbus, Ohio, where a gallon had risen to $2.55.
Couture has watched as gas prices have ticked higher. Prices have risen for three straight weeks, reaching a national average of $2.574 a gallon of unleaded regular, the Energy Information Administration said Monday.
Rather than rising consumer demand or a tightening of supply, the falling U.S. dollar is most likely to blame.
All one needs to do is look at the price of crude, which crossed $75 for the first time Wednesday, then neared $80 on Monday.
Oil is bought and sold in dollars, essentially making it cheaper when the U.S. currency tumbles. The dollar has fallen throughout the month.
And the rising price of crude is exacerbating problems that already existed for the refiners that make and sell gasoline.
People are driving less, trucking companies are shipping less, and airlines are cutting back on jet fuel because businesses travel has ebbed.
That lack of demand has forced refiners to cut production to levels more common in the aftermath of a hurricane. And because crude prices are rising, profit margins at refiners who must buy crude to make fuel are shrinking. As a result, they are making even less fuel.
U.S. gasoline supplies fell by more than 5 million barrels last week, but are still well above normal levels at this time of year.
Gasoline purchases by Americans plunged in late 2007 when the recession began to grip the country. Between November 2007 and October 2008, the nation collectively drove 100 billion fewer miles, the largest continous decline in history, according to the Federal Highway Administration.
Miles driven through July of this year are down 1.25 percent despite the cheapest gasoline in three to five years.