Pain at the Pump

BUSINESS

By Michelle Cassell
Managing Editor

Chapel Hill and Carrboro residents have been experiencing “gas pump shock” when they stop to fill their tanks.  According to the AAA, gas prices in Durham and Chapel Hill are averaging $3.644 per gallon for regular. If your car needs premium, that is averaging $4.399 per gallon.

Only one month ago, according to the AAA, the average price for regular gas in Durham and Chapel was $3.284.  That’s an increase of eleven percent in one month.

According to CBS News “Typically, when gas prices increase, the main culprit is the cost of oil. This month, however, oil prices are only part of the story.”  CBS goes on to list three main reasons for the increase: rising temperatures, rising crude oil prices, and a decrease in worldwide oil production. 

According to the World Meteorological Organization, July saw “the hottest three-week period ever recorded; the three hottest days on record; and the highest-ever ocean temperatures for this time of year.”  According to CBS News senior transportation correspondent Kris Van Cleave, such high temperatures meant oil refineries had to reduce their output, as many of them can only operate at temperatures between 32 and 95 degrees fahrenheit.  Andrew Gross of the AAA said.   “Last month’s extreme heat played a role in the recent spike in gas prices due to some refineries pulling back.”

The second reason for the increase is rising oil prices.  Crude oil prices have recently hovered around $80 per barrel, up from around $70 a month ago.

The final reason for the increase is a decrease in oil production worldwide.  Russia, the world’s third largest oil producer, decided to cut production.  At the same time, Saudi Arabia, the second largest, also cut production.  “This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” Saudi Prince Abdulaziz bin Salman said last week, adding that the cut “can be extended or deepened” if the need arises.

The AAA says there is a reason to be hopeful.  According to new data from the Energy Information Administration (EIA), gas demand decreased slightly from 8.94 to 8.84 million barrels per day last week.

Meanwhile, total domestic gasoline stocks increased by 1.5 million barrels to 219.1 million. Lower gas demand amid increasing supply will likely help to slow price increases in the days ahead.  In addition, the AAA points out that prices are still lower than a year ago.  In the Durham Chapel Hill area, last year at this time, the price for regular was $3.964.  So it could be worse, but that thought won’t help the current “gas pump shock”.

Michelle Cassell is a seasoned reporter who has covered everything from crime to hurricanes and local politics to human interest over the course of 35 years. As managing editor, she hopes to encourage writers of a wide range of backgrounds and interests in TLR’s coverage of Southern Orange County news.