FRANKLYWNOW - Lesko: Why Gas Prices are on the Rise

By Fox 40 Staff.
Jason: Crude oil prices have been creeping up only slightly, so why are we paying more at the gas pump? Greg Lesko of Lesko Financial offers some insight. Greg.

Greg: Thanks, Jason. If you asked a random sampling of people why gas prices have gone up over the past month you'd probably hear things like "problems in the middle east" or "price gouging by oil companies or gas stations." Simple and sinister explanations about something that hits people in their wallets can be comforting to some.

But the real reasons turn out to be more complex. One factor behind the increase has to do with production problems at the refineries. There was an explosion at an Exxon refinery, coupled with fears that a strike by United Steelworkers could slow production down at all the refineries.

Also, demand is up, and basic economics says when that happens, prices also rise.

Jason: Don't prices usually go up in spring anyway?

Greg: Yes, the big drop in the price of oil late last year coincided with the winter fuel season, when gas is cheaper to produce, so prices at the pump were way down.

The refineries are now switching to warmer weather blends. It takes time for the switchover--which slows production; plus spring and summer fuel is more expensive to produce.

Jason: Will prices at the pump keep going up?

Greg: Prices have been going up about 10 cents a week since late January.
Analysts expect that to continue as we head into the spring and summer driving months.

On the bright side, we're still paying about a dollar less than we were at this time last year.