Did you see the price of gas this morning?
Q&A: We told you gas prices were going up. Here's why:
ORLANDO, Fla. – Last week, News 6 Investigative Reporter Mike Holfeld reported on a new app that helps you get money back on every gallon of gas you purchase at participating stations. The app, available in both Orlando and Tampa, is free to download for both Android and IOS devices.
As part of the story, News 6 talked to AAA spokesperson Mark Jenkins, who puts out a gas price forecast each week. Though we only used Jenkins for a small part of the story last week, he had plenty to say about the gas industry and offered some insight as to why drivers are paying more at the pump lately.
Below is a full breakdown of the conversation.
WKMG: How bad is it?
Jenkins: Well, it's not great news. Gas prices are probably their highest in about three years. That's what we're looking at, about 30 cents more than this time last year. So by and large, that amounts to about $4 more for a full tank of gas. So it might not really impact everyone but some of the people whose budgets aren't really as big and are a lot of their budget is allocated toward gas prices, it can definitely be a little bit painful for them.
WKMG: Why are gas prices going up?
Jenkins: Usually, we see this during this time of year. The refineries are undergoing maintenance. They're switching over to summer blend gasoline. But there has been this trend where there's not as much oil supply globally in recent years when you saw gas prices dip below $2 a gallon. It's because there was this glut in global oil supply in recent years. Some OPEC and non-OPEC oil-producing countries have gotten together; they've reduced the amount of oil that they produce on a daily basis. And so that's helping to kind of cut into that glut. We're now seeing less oil as a result and that drives up the price. So when oil prices are higher the price of gasoline gets higher, too.
WKMG: The OPEC nations said they would do this, didn’t they?
Jenkins: Yeah, it was a few years ago when they decided to do this and you saw kind of an immediate jump at the pump and then things kind of settled back down. Now there's just been this this kind of upward movement in gas prices throughout the past ... six months or so and OPEC is estimating that it's around Q2, Q3 of this year that the oil market could return to balance. What that means is that we're once again susceptible to volatility at the pump.
WKMG: How so?
Jenkins: There are geopolitical issues. If there is a major shift in the economy or hurricane strikes in the Gulf of Mexico or the Gulf Coast like last year, we can see gas prices surge. When we launched missiles into Syria, gas prices just shot up.
There's also the concern with the potential for the United States to levy new sanctions on Iran and also on Russia. And so any time that there's any major shift like that, then the oil market responds and oftentimes it's not in a good way for us, the consumer.
WKMG: What about our ability for domestic oil?
Jenkins: We have really strong refinery capacity here in the United States. But the problem right now is that we do export a lot of our fuel because there is the market for it. Right now, Venezuela is exporting probably their lowest amount of fuel, or they're producing probably their lowest amount of fuel, in history. So we, as the United States, are the provider for fuel for a lot of countries out there now that we hadn't been before. And if we weren't providing so much fuel externally or internationally, then we would have that backup and supply here and then our prices would be lower. But the market is there for those producers to capitalize for financial gain.
WKMG: What about prices in Orlando? How are they doing compared to the rest of Florida?
Jenkins: Orlando and Tampa tends to be the lowest gas prices in the state. And we're seeing that right now; fortunately, the average price in Orlando today is $2.67, which is about 29 cents more than this time last year. We saw the highest average prices for gasoline in the month of April that we've seen in four years. And it's largely due to the increase in oil prices as a result of the decrease of oil supply globally.
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