AAA Michigan reports the state average for a gallon of gasoline climbed 16 cents compared to last week. In Grand Rapids, it soared 23.4 cents per gallon in the last week according to GasBuddy.
“We saw gas prices across Grand Rapids and Western Michigan jump to their highest levels in seven years.”
Patrick DeHaan is head of petroleum analysis with GasBuddy. He explains over the past three weeks the price of a barrel of crude climbed to $85 a barrel. It’s seven year high. It was only a matter of time before stations passed along the increase to motorists.
“Now, it came right after oil prices plummeted by about $5 a barrel, which is why I was scratching my head. I would have thought that the drop in wholesale prices, which was approaching 20 cents a gallon, would have given stations enough breathing room to avoid passing along the jump that they had seen several weeks ago.”
Big picture, the pandemic is creating global supply imbalances. DeHaan points to a shortage of coal in China. It’s now purchasing all types of energy meeting demand. Natural gas is in short supply in Europe. U.S. natural gas is now making its way there pushing up prices here.
“And as 38% of the nation’s electricity comes from natural gas, some of those facilities can switch over to run crude oil.”
Until energy supplies increase or return balance, prices will remain high.