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Summer of 2008′s fuel prices outlook
The entire supply chain is under great financial stress as the spot price of WTI crude oil rose steadily to over US$110 per barrel, on March 13th of 2008 — a record-setting price.
While the price for WTI crude oil is expected to average near $100 per barrel through the rest of this year, transport companies and everybody else getting their supply through their services are bracing for the effects of higher fuel prices during the summer season, defined as the period from April 1st to September 30th.
Pricewise, let’s start with the regular grade gasoline retail prices, which averaged $2.93 per gallon last summer (of 2007) and are projected to average $3.54 per gallon during the current driving season.
The trucking business is going to be hit even harder as diesel fuel prices, which averaged $2.85 per gallon last summer, are projected to average $3.73 this summer.
In fact, the monthly average gasoline price at the pump is projected to peak at just over $3.60 per gallon in June while the monthly average diesel price is expected to peak at just over $3.90 per gallon in April.
These rather scary retail price projections reflect higher prices for the refiners’ average acquisition cost of crude oil, projected to average close to $97 per barrel, up from about $67 per barrel last summer which account for a hefty $30 price hike, per barrel. Furthermore, strong world distillate demand growth, especially in Europe and Asia, will do nothing to help the situation domestically, in America.
It is important to note, however, that even if the US national average monthly gasoline price comes to peak around $3.60 per gallon this summer, it’s entirely possible that prices, at some point, will cross the $4 per gallon threshold, severely hurting the transport industry and those who depend on it.
Countless consumers may be forced to reconsider driving their cars at all and the same kind of dilemma may happen for transport operators of all sizes as well as petroleum-based product manufacturers.
Transportation and logistics companies, especially in America, need to plan (and provision lots of “emergency money”) right now for this summer’s potential fuel price explosion.
Tags: gas, fuel, wti crude oil, oil, diesel, petroleum, pump, america, usa, transport, logistics, summer
2 Responses to “Summer of 2008′s fuel prices outlook”
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Keep in mind that the main reasons for the price at the pump to hit the dreaded $4 per gallon mark has to do with a mix of variations: (1) around the monthly averages, (2) across States and (3) within States.
Of course, everybody is holding their breath to see if this nightmarish scenario will pass or if will hit the American economy head-on.
Gas prices these days are just getting higher, I think the government should focus more on alternative energy.