Today’s Energy Update
(Because Energy Fuels Our Lives)
After the price for gasoline at the pump had risen over much of the first month of this year, I published a piece in late January detailing seven key factors that go into determining what those prices will be in the United States. Given that gas prices have gone up again in the past two weeks after the first half of February was relatively stable, now is a good time to discuss the reasons why that has taken place.
There are three main reasons for this recent uptick of 13-15 cents per gallon across the country, as follows:
The deteriorating situation in Venezuela – That late January piece in part had this to say about the possible impact on U.S. gas prices due to the looming collapse of the Maduro regime: “Venezuela has been a fairly significant exporter to the U.S. but its volumes have steadily fallen in recent years as its economy has collapsed. U.S. refiners will have to find another source of crude to replace the lost Venezuelan volumes, and to the extent they must pay higher prices to obtain that feedstock, the higher costs will be passed through to the consumer.” This appears to have impacted gas prices to some extent, although no one really seems to have a good handle on how much of the recent price climb is attributable to Venezuela.
Routine refinery maintenance season has begun. – Late February is typically the time of year when many refiners begin taking their facilities temporarily offline for routine maintenance purposes. Refineries are very complex facilities with a high number of moving parts that operate under high temperatures and pressures, in good weather and bad. All of these factors and more require require that the facilities be shut down for a few weeks once or twice each year for routine maintenance.
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