Gas Prices Continue to Set Records
January saw record prices at the pump:
January is typically a month of falling gasoline prices because fuel demand falters in the slower travel weeks that follow the year-end holidays.
Not so this year.
In January, retail gasoline prices averaged $3.37 a gallon, according to the Oil Price Information Service, a private fuel information service. That compared with the previous record average for the month of $3.095 a gallon, set last year. In 2010, January gasoline prices averaged just $2.71 a gallon.
And what’s the cause?
Increased demand for oil has helped increase crude prices, leaving the U.S. benchmark grade hovering around $100 a barrel in January, up $10 to $15 from year-earlier prices. At the same time, worldwide thirst for diesel, the fuel of industry, has caused U.S. refiners to export large amounts of diesel and therefore to produce less gasoline for U.S. motorists.
I’ve been saying this for years. Gas prices have never really become “affordable” again even after they retreated from the record highs of 2008. The fact that in California gas never fell below $3 a gallon even during the depths of the recession should have been a clue. Now that recovery seems to slowly be getting under way, demand is rising again and gas prices are rising with it.
The effect will be to throttle the economy as energy costs rise higher than people can afford, derailing the recovery. And the cycle will continue until eventually we either build alternatives or the price becomes too high for people to bear and they just stop driving. Without alternatives, that latter scenario is catastrophic for the economy.
Rising gas prices should be a sign that high speed rail is as good an idea as ever. Unfortunately, most HSR opponents refuse to believe that the era of cheap gas is over. They’re about to get a rude awakening.