Why are we paying so much at the pump? Petroleum analyst answers your questions

Local News

CHESTERFIELD COUNTY, Va. (WRIC) – GasBuddy reports gas prices in the Richmond area have increased by 10 cents in the last week alone.

Patrick De Haan, head of petroleum analysis at GasBuddy for more than a decade, said the sky’s the limit and that the high gas prices seen now could potentially go up another 10 to 15 cents a gallon.

He said we had stability in prices over the summer, but in the last three weeks, gas prices have taken off.

“They’re getting worse and worse every day,” said Bob Stohmer, who was stopping at a gas station in Midlothian Monday. “It makes it really rough on people having to travel going to work, especially if they’ve got a long way to go.”

De Haan said the average price of gas in Richmond has jumped to $3.28 a gallon.

“Unfortunately, this morning, we’re at another 7 year high, up another dollar and a half to now $85 a barrel,” he said about the price of crude oil.

AAA reported Monday that Virginia’s average for gas prices is up eight cents from a week ago, up 30 cents more than a month ago and up $1.22 from Oct. 25, 2020.

Right now, gas across the nation is as high as $4.54 a gallon in California.

Customers who need to fill up like Stohmer said they haven’t seen prices quite this high in a while in the Richmond area.

“I got a pickup truck and when I’ve got to fill that up it goes over $50.00,” he said.

De Haan said the sharp increase in gas prices is thanks to a tremendous rise in demand for oil as we continue to recover from the COVID-19 pandemic.

“It’s kind of a double whammy. China’s buying up crude oil and the high price of natural gas in Europe is pushing up oil demand as natural gas power plants here switch over to crude oil,” he explained.

De Haan said it’s an energy crunch overseas, where in China, they’re short on coal and buying up natural gas and oil at a furious pace, which is boosting the demand for oil.

In Europe, the shortage of natural gas is pushing up prices in the U.S. as some of the nation’s natural gas is going to be shipped there. De Haan said that’s boosting oil demand because a lot of the nation’s power generation is from natural gas plants that can switch over to crude oil.

When asked about allegations that President Joe Biden is the reason the price of gas has gone up, De Haan explained that people have tried to make the price change a political talking point but the increase is due to the pandemic. De Haan shared a graph with 8News showing that production of crude oil fell at the start of the COVID-19 pandemic in 2019. It has remained far below pre-COVID averages since then.

Graph made by the U.S. Energy Information Administration

Essentially, he explained, demand for oil continues to go up and supply isn’t following. Now, the national average of gas prices across the U.S. has grown six cents in the last week to $3.36 a gallon.

In addition to those factors, De Haan said the Organization of the Petroleum Exporting Countries, or OPEC, decided not to take any action in increasing oil production in a recently called meeting.

The prices are pushing people in Central Virginia like Lois Jones to find other ways to save at the pump.

“One thing I do is drive my car less,” Jones laughed.

Stohmer said he has a cousin that has to travel to Washington, D.C. and is spending a lot on gas.

“That uses up a lot,” he said. Good thing he found two other guys that they managed to form a carpool.”

He’s hoping something will bring the prices down. “I can remember back when gas was 20 cents a gallon. That’s a long time ago. Too bad we can’t bring those days back,” he laughed.

De Haan expects gas prices to continue to increase until the demand for oil starts to come down or more oil is produced.

But, De Haan did have some good news for customers in an interview Monday with 8News. “I really don’t foresee a likely scenario where we’ll get to record levels. I don’t think we’ll get to $4, but having said that, you know, if mother nature throws at us a bitterly cold winter or if there’s an event in the Middle East that’s just unforeseeable, there are factors that could get us there,” he said.

He said it doesn’t look like OPEC will increase production anytime soon.

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