On July 1st
, our Chief Oil Analyst, Tom Kloza,
answered some questions asked to our @GasBuddy Twitter account. In case you
missed the half-hour conversation, below is an edited transcript, along with some
additional questions answered.
Q: How come
prices keep rising? Will the storm off Florida affect prices?
Tom Kloza, Chief Oil
Analyst at GasBuddy.com: Hurricanes always destroy demand. They rarely, but
sometimes violently impact supply. This one should only impact demand.
Q: How much
profit does a gas station make at the pump from gasoline?
TK: Just about 15cts gross margin, but 10cts or more goes to
credit card companies and overhead.
Q: We’ve owned
very fuel efficient vehicles since the early 2000’s. Where do you see current
diesel prices in LA area?
TK: There is more
upside to diesel than to gasoline because diesel is the world’s fastest growth
fuel. Prices now are around $4.20 in LA but they could go much higher in the
winter months of 2014-2015.
Q: Ouch! Best
price I find these days is $3.87 in Anaheim. The problem? Only 2 diesel pumps
attached to a gas pump; I wait longer now.
has actually seen wholesale gas prices back off this week – patience may pay
off for gas there.Q:
XL pipeline help with lowering gas prices?
TK: No. Keystone
may make sense for later in the decade, but the lack of pipeline is NOT
impacting prices these days – only politics.
Q: You say you’ll
“take the under” on gas prices in the 2nd half of 2014. Why? Is that
the usual trend or is something else affecting it?
TK: Once Sep. 15th
comes, the formulae for baking the “gasoline cake” changes – easier to make,
and prices drop with lower demand.
Q: I’m driving
all over this weekend. Is there a best time of day to fill up?
TK: No real
difference in time, although some states allow multiple price changes, and
cheaper prices are in opposite flow lanes. In other words, the incoming
commuter traffic can see prices higher than the less active lanes – e.g. Texas.
Q: I moved to OH
8 years ago. Why does gas here move in huge steps up then slowly down? $3.89
two weeks ago, some are in $3.30’s now.
TK: Great Lakes markets have the most volatile spot, or
bulk, markets. They move with Chi pipeline – bulk down 10cts in last week
Q: How low can we
expect gas prices to go over the next couple of months?
TK: Flat forecast for the next couple of months – maybe down
5cts in next 10 days. Beware Aug. hurricane season, however.
Q: Are you
tracking the new CARB mandated gas price increase that is set to hit on Jan. 1,
2015 in California?
TK: Yes; it looks as though that will translate into a
15cts/gal cost-of-business hike for CA consumers.
Q: Why is the
Great Lakes region so volatile?
TK: Almost all
the fuel comes from local refineries; when a refinery or two has issues, the
price can quickly change. When those refineries restart or come back from
maintenance, prices can quickly drop. Just-in-time inventory practices can lead
to just intolerable brief spikes, or just in the nick-of-time price drops.