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Paying Through the Hose

Paying Through the Hose

 

  San Antonians are beginning to pay through the hose at the pump.

 

  Gas prices in the city today average $3.48, that's up 11 cents a gallon in just the last week.

 

  One year at this time, we were paying $3.12 a gallon.

 

  And Texas oil analyst Andy Lipow says we should fill up now, because prices are shooting up.

 

  "I expect that gasoline prices are going to continue to rise over the next couple of days, another 5 to 7 cents a gallon before peaking," he said.

 

  One of the problem, with the economy improving and more people working, more people are taking summer vacations this year.

 

  "Gasoline demand is now at its highest level that we have seen in 2013, and you couple that with refinery problems that are impacting supply, as well as lower levels of imports, and prices have risen," he said.

 

  Several other factors are contributing to the gas price increase.  The unrest lately in Egypt has placed what traders call a 'danger premium' on oil, because, even though Egypt is not a large energy producer, it controls the Suez Canal, through which much oil passes.

 

  Commodity traders are pushing up the price of oil as an alternative to gold, which has seen a steep fall in the last two months.

 

  There have also been problems at refineries which are operating in many cases at peak summer capacity.  Gasoline prices in many parts of the country are above $4 a gallon.

 

  There has also been a move in many states to raise gasoline taxes to pay for road repairs.  Since all vehicles are more fuel efficient than they were in the 1990s, when most gas taxes were set, less money is coming in for road projects.

 

  And another major factor impacting gas prices is the federal governments' confusing ethanol mandate.  Pressed by farm state lawmakers, the Environmental Protection Agency has ordered that gasoline contain a fixed amount of ethanol, which is made from grains like corn.  If a refinery is already turning out fuel that is 10% ethanol, and they don't want to increase that amount for fear of turning out fuel which will damage some engines, the refinery is required to buy 'ethanol credits.'  Some analysts estimate that that system is adding a dime a gallon to the price of gasoline.

 

  There is also the fact that all of the oil in the world that is easy and cheap to obtain has already been depleted.  Newer technologies, like fracking, are far more costly, and some estimates are that fracking requires oil prices to be at least $70 to $75 a barrel for the process to be worthwhile for the drilling company.

 

  There is also the failure of government regulators to approve pipeline construction.  That requires oil and gasoline to be shipped by the far more expensive rail and train, adding to the cost and, ironically, a system of transportation which is more dangerous to the environment.

 

  Because of these and other factors, don't expect to ever see gas below $2 a gallon again.  But increased U.S. production will also prevent gas prices from flying out of control, at least for the next several years, analysts say.

 

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