Gas Prices Are Probably Going to Keep Rising
As I type this, gas prices have gone up about 20 cents in the last 11 days. That’s a big jump, and it looks like we have more increases on the way. The national average is currently $3.67 a gallon for regular unleaded, with wide regional disparities nationwide – for example, regular unleaded is around $3.35 here in VA, but regular unleaded is basically 4 bucks a gallon in CA. It’s worse in Los Angeles and San Francisco; yesterday, a friend of mine tweeted a photo of the posted prices at an Exxon station next to his apartment in San Francisco, and according to that sign, regular was at $4.28 a gallon in the city.
Why will prices keep rising?
Well, first of all, it’s summer. People drive a lot more during the summer, and this summer is no different. Prices have historically gone up every summer.
Second, there is considerable turmoil in the commodity markets, and that never helps in terms of fuel prices.
Third, there is a great deal of unrest in the Middle East, led by the toppling of the government in Egypt. Although we get much less oil from this region than we used to, whatever happens there still affects prices on the global stage.
Fourth, and this may end up being the most important factor, North America is having some refinery issues, and if those refineries have to shut down for maintenance or repair, that could send prices upward sharply for a few months.
And then there’s always the wild card of tornadoes or hurricanes this summer – it is supposed to be a active storm season this summer (and fall).
None of this is going to make the lives of small business owners any easier in the next few months. Many small businesses have a substantial portion of their expense budgets going towards fuel costs already. Let’s hope the rises in gasoline costs don’t come at us too fast.