As a part of a homework assignment for MCO425x Media Literacy – a massive online open course (MOOC) sponsored by Arizona State University, EdX, and the McCormick Foundation – my fellow students and I were asked to create a post for our class blog. The objective is to write about how media of all kinds treats a topic that I care and know a lot about. Each of us is to become the best media critic on that topic.
Tracking gasoline prices has been a personal interest of mine since Summer 2008. That particular summer, I paid $4.60 per gallon of premium gasoline. Needless to say, my budget was significantly impacted by the amount of money needed to meet my weekly transportation expenses. I became interested in knowing how the cost of a gallon of gasoline is calculated, and the impact of market forces on the price volatility of this precious commodity.
My blog, A Bridge for Business & STEM, debuted three years ago. Energy is one of the categories covered and the topic of fluctuating gasoline prices is discussed periodically. My last post on the topic: Gasoline Prices Continue to Rise Prior to Start of Summer 2015 Driving Season, was published on May 7, 2015.
We are about midway this summer’s driving season (which began Memorial Day weekend and ends on Labor Day). Today’s average price of a gallon of gasoline in the U.S. is $2.768. One month ago, it was $2.800 (Source: GasBuddy.com) signaling that U.S. prices are relatively stable. Overall this is good news for the majority of motorists in the country, however, gasoline costs have spiked upward in southern California. KTLA 5 (Los Angeles) reported that gas prices in Southern California jumped 67 cents within the past week. Motorist in Los Angeles are seeing some of the highest prices at close to $6 per gallon. [Ref 1]
Not only is this not good news for motorist in southern California, the question is whether or not Arizonans will see an impact from these spikes since 50% of the state’s supply comes from California.The average price of a gallon of gasoline in Arizona has risen from $2.72 to $2.833 over the past month.
According to AAA [Ref 2], the price spike is the result of a higher than expected demand for gasoline that resulted in significant drawdowns in supply and distribution systems being unable to keep up. Upward pressure is likely to remain on prices in the region until supply issues are resolved. It is expected that this problem will subside in a few weeks when inventories stabilize, and the refinery in Torrance, CA – that has been offline since mid-February due to an explosion – comes back on line.
Unseasonable weather has proven to be a factor in the volatility of gasoline prices. Another factor is politics, especially in the Middle Eastern countries. Although it is too early to tell, Middle Eastern politics could be seeping into the U.S. gasoline market with the recent announcement of the Iran Nuclear Deal. While the terms of this deal have not been approved and are under review by the U.S. Congress and others, keep in mind that Iran is a member of OPEC and has significant crude oil reserves and refinery capacity. Lower gasoline prices in the U.S. are projected if the embargo against the country of Iran is lifted.
Happy motoring for the rest of the summer driving season.
1. In Unprecedented Spike, SoCal Gas Prices Jump 67 Cents in a Week, by Ashley Soley-Cerro, Wendy Burch and Chip Yost, KTLA News 5, Los Angeles, CA, July 14, 2015, http://ktla.com/2015/07/14/gas-prices-continue-to-surge-in-socal-with-some-los-angeles-county-stations-charging-more-than-5-per-gallon/
2. California Gas Prices Skyrocket, AAA, July 13, 2015, http://fuelgaugereport.aaa.com/california-gas-prices-skyrocket/