1. Headline
  1. Headline
By John W. Schoen Senior Producer
msnbc.com

Q: Why have the gas prices at the local gas stations not gone up in a couple of months when oil has gone up 10 to 15 percent a barrel in just the last couple of weeks? Last time oil was getting out of hand you could watch the gas stations change the prices while you where pumping the stuff?Al O., Rockland County, N.Y.

  1. Stories from
    1. Husband Convicted of Murdering Wife with Lethal Injection of Nicotine
    2. Holly Williams Welcomes a Daughter
    3. Police Baffled by Utah Family of 5 Found Dead in Living Room
    4. Ashley Tisdale Goes Purple! See Her Fun New Hair Hue
    5. Mom Accused in Salt Poisoning of 5-Year-Old Says Child May Be Responsible for His Death

A: Keep an eye on those pump prices, Al. The recent pullback could be temporary.

One big reason gas prices jumped this spring was that there looked like there might not be enough gasoline to go around in time for the summer driving season. (Gas prices usually rise somewhat every summer because of the increased requirements for special “reformulated” blends designed to reduce air pollution during warmer weather.)

While those high prices made it a lousy time to fill up your tank, they made it a great time to make gasoline — profits margins for refiners were huge because crude was still relatively cheap. So those refiners began cranking up production to near record levels — and they made a bundle of money by doing so. Now, with all that gasoline sloshing around the system, and the summer driving season wrapping up, prices are falling again.

But so are profit margins for refiners. If unusually cold weather this winter cranks up demand for heating oil, there will be less crude oil available to make gasoline. And if gasoline supplies get tight again, prices could head back up.

A lot depends on what happens to oil prices. So far, the recent oil price rise hasn’t yet moved through the system. But if oil prices keep rising through $50 a barrel — and stay there — the price of all refined products will go up.

What’s troubling about the current oil price run-up is that it’s not based on OPEC withholding oil. In the past, if prices rose too far, OPEC would simply pump more oil and prices would fall. But for the first time since the cartel was founded in 1960, oil producing countries are pumping as fast as they can. (At these prices, who wouldn’t?) Saudi Arabia has said it has a little spare capacity left, but so far its promises to pump more haven’t helped.

The good news is that the run-up in oil prices also seems to be coming from traders bidding up prices on fears that we may see actual shortages of oil. (Kind of like when everyone goes out before a hurricane and buys more flashlight batteries than they really need.) If the markets settle down, and political stability returns to major oil producers like Iraq and Venezuela, we’ll see oil prices fall again.

But oil could well hit $60 a barrel before it hits $30 again.

© 2013 msnbc.com Reprints

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

More on TODAY.com

  1. Peter Kramer / NBC

    Derek Jeter tells TODAY: ‘I consider myself young again’

    9/30/2014 10:30:02 PM +00:00 2014-09-30T22:30:02
  1. 20th Cenrtry Fox via Everett Col

    Should you see ‘Gone Girl’? From Affleck to Fincher, 4 reasons to buy a ticket

    9/30/2014 5:37:22 PM +00:00 2014-09-30T17:37:22
  1. CDC confirms first Ebola case in U.S.

    The Centers for Disease Control and Prevention has confirmed the first patient to accidentally carry Ebola to the United States has been diagnosed at a hospital in Dallas.

    9/30/2014 9:02:46 PM +00:00 2014-09-30T21:02:46
  1. J. Scott Applewhite / AP

    White House breach was ‘unacceptable,' Secret Service director testifies

    9/30/2014 6:37:10 PM +00:00 2014-09-30T18:37:10
  1. Detroit Lions via Twitter

    Fumble! NFL player injured while potty-training his puppy

    9/30/2014 4:23:14 PM +00:00 2014-09-30T16:23:14