A gallon at $1.59 is but a pre-Christmas memory these days, as prices tended to hover around $1.95 in the Kenosha area late this week.
A state petroleum lobbyist said the steady increase has mirrored a jump in crude oil prices, since the per-barrel trading price bottomed out in December. But a spokesman for AAA Wisconsin countered that national experts are saying today’s gas prices do not make sense, as they relate to the crude market.
Light, sweet crude closed at about $46 per barrel in Friday trading. That is up about 25 percent from the middle of December, when it traded in the mid-$30s.
“It is true that crude oil and gas prices tend to track each other over time, and what you’re seeing here is a little lag between crude oil prices rising and prices starting to filter into the marketplace,” said Erin Roth, executive director of the Wisconsin Petroleum Council.
Pump price increases have also accompanied an increase in demand for gas, stemming from the holiday travel season and the significant price decreases that occurred in the last quarter of 2008.
But Larry Kamholz, the state AAA spokesman, said he believes the recent run-up in gas prices flies in the face of high supply, still-relatively-low crude prices and lessened demand.
“Basically, what the experts are saying is that crude oil is so low, there’s really no reason why the price shouldn’t be falling, as well,” Kamholz said.
In the meantime, Kamholz said the refineries, wholesalers and retailers are pointing fingers at each other.
Roth noted the significance in the price of crude, as it relates to what motorists pay at the pump.
According to a 2007 calculation by the U.S. Energy Information Administration, crude accounts for 58 percent of the retail price for a gallon of regular unleaded.
Refining costs and profits account for 17 percent, and federal and state taxes take up 15 percent. The remaining 10 percent pays for distribution and marketing.
At $46 per barrel, crude costs would account for $1.10 of the cost of a gallon of gasoline. Add federal and state taxes of 51 cents per gallon, and $1.61 of the pump price is accounted for.
Jim Willkomm, chief financial officer for Willkomm Companies, a Somers-based fuel wholesaler, said his markup remains the same, regardless of the cost of gas. Willkomm said it is in his best interest for gas prices to remain lower, as that tends to precipitate higher demand and better sales in Willkomm Companies-owned convenience stores.
But, he added, how low can gas prices possibly go?
“When you look at everything that goes into a gallon of gasoline or a gallon of diesel fuel before it gets into the tank, when you look at the whole thing, it’s amazing that you can buy a gallon of gas for $2 a gallon,” Willkomm said.
There is a silver lining for motorists: observers expect another drop in gas prices in the coming months.
Willkomm noted that a few new, major refineries are going online. He said all factors indicate prices should not be escalating to $4 and $4.50 per gallon, as they did last year.
Kamholz said people are waiting and watching.
“We’re still anticipating we’re going to see some drop in prices here before we hit the spring and summer seasons,” he said.
