CADILLAC — Don’t be surprised if gas prices jump soon in Cadillac.
Gasbuddy Senior Petroleum Analyst Patrick DeHaan said he expects prices at stations in the region to reach the $2.69-$2.75 per gallon mark within the next few days or next week at the latest.
Top U.S. officials blamed Iran for an attack on oil tankers in the Gulf of Oman Thursday but DeHaan said this development should have a negligent impact on prices in this area for the time being.
DeHaan said the tankers were reportedly carrying a minuscule fraction of the overall oil available in the marketplace, so the attack wouldn’t impact supply very much.
Its effect on market confidence and trade relations between U.S. and Iran, however, is to be determined.
He said it’s possible 1 or 2 cents of the upcoming price spike could be the result of the attack, merely because of the uncertainty it is causing.
If attacks continue or other developments further destabilize the U.S. relationship with Iran, DeHaan said oil prices may rise in the longterm but it’s too early to say.
DeHaan said the main factor contributing to the expected price increase is a phenomenon known as “price cycling.‘
This phenomenon has been recognized by the federal government as occurring in the Great Lakes Region, and involves competing gas stations lowering their prices to the point of not making a profit, then raising them significantly in a short period of time.
The point at which gas stations are not making profits is nearing, which is why DeHaan believes the spike could be imminent.
AAA recently issued a press release reporting that Americans are changing their perception of what they consider “too expensive.‘
AAA’s 2019 Gas Price survey found that 50 percent of consumers think paying $3 per gallon is too high — an increase of 30 cents from last year when half of consumers reported $2.70 as too expensive.
The 2019 price point is also 50 cents more than in 2016, when half of consumers thought $2.50 was too much to pay at the pump.
“For consumers today, paying more to fill up their gas tank may feel less shocking due to the national average pushing within pennies of $3 per gallon the last two spring seasons,‘ said Jeanette Casselano, AAA spokesperson.
“However, there is good news for consumers this summer — the highest prices of the year could be in the rearview mirror. With most refineries operating at normal levels, demand at robust rates, and cheaper crude oil prices, summer gas prices are poised to be a little less than last year — dropping as much as a dime to lower the national average to $2.70.‘
DeHaan agreed that prices in the Cadillac region likely have peaked and will hover well under the $3 mark throughout the summer.
As for decreased sensitivity to higher gas prices, DeHaan said this seems like human nature: if the price is $3, people are likely to say that is too much; if it is $2.70, they still are going to say that’s too much.
“It’s all about context,‘ DeHaan said. “People tend to get used to the gas prices around them.‘
AAA reports domestic gasoline demand for summer 2019 has been forecasted to reach some of the highest levels on record in the U.S. Meanwhile, domestic gasoline stocks are at their lowest level going into June since 2016.
“If demand rises while gasoline stocks remain low, pump prices could see modest increases, especially if supply is tight in local markets,‘ AAA reports. “On the other hand, gas demand could fall, as we’ve seen in recent weeks due to inclement weather from the Rockies to the Midwest and south. Moreover, the added threat of a major hurricane making landfall could also impact demand, which could suppress pump prices.‘