Gas Prices Set to Climb? | Green Energy News

May 13, 2007 – Vol.12 No.8

GAS PRICES SET TO CLIMB?

Don’t like high prices at the pump? Energy information provider Platts thinks consumers should be concerned. Prices could climb even higher later in the year. Here’s why.

In April, 10 members of the Organization of Petroleum Exporting Countries (OPEC) produced an average of 26.57 million barrels per day (b/d) of crude oil. This was actually up by 30,000 b/d from 26.54 million b/d in March and 770,000 b/d above OPEC’s 25.8 million b/d target figure.

However (and this is where the concern comes in) the International Energy Agency (IEA) predicts that OPEC needs to supply 29.3 million b/d in the second quarter of the year to keep oil inventories balanced. Further, the IEA thinks that OPEC will need to supply 30.4 million b/d on an annualized basis this year. The heaviest supply needs will be in the third and fourth quarters when 30.5 million b/d and more than 31 million b/d respectively will be needed to quench the world’s thirst for oil.

In other words, OPEC is coming up short and the situation could get worse if they don’t step up of the pace of production. (If they can, that is.)

Platts is also worried about what could happen in the Gulf of Mexico this year: Another year like 2005, with Katrina, then Rita, damaging oil rigs, then gasoline prices could go into the stratosphere.

The Atlantic hurricane season got a three week jump start already when subtropical storm Andrea formed off the coast of South Carolina. While Andrea may have been a fluke she didn’t portend good things for the season.

There is one factor that may work (to some extent) in US consumers’ favor in the last quarter of the year. The switch-over to winter fuels may moderate the price of gas a bit The addition of 10 percent ethanol in summer gasoline adds a couple of dimes or so to the cost of gas in markets where the boutique gasolines are required by law. Not adding the ethanol in winter months should dampen the possible effects of higher oil prices on a gallon of gas.

Platts has been providing energy information for nearly a century. Visit Platts at http://www.platts.com/