Ottawa Gas Prices, Traffic and Transportation Blog

Ottawa Gas Prices, Traffic and Transportation Blog. News, Articles, Analysis, Statistics, Observations, Forecasts, Opinions, Comments and Data on the Gas Prices, Traffic and Transportation in Ottawa (Ontario, Canada).

Sunday, May 07, 2006

$4 for a Gallon of Gas?

If gas prices follow trends from past years and peak around Memorial Day, drivers may avoid paying the dreaded $4-a-gallon price this summer.

But because the current spike in prices was not expected, there's no telling what gas prices will do this year.

Typically, prices spike in spring. That's when refineries make a costly switch from their winter blend to a cleaner-burning summer blend. Production at refineries then goes up in late spring.

Since mid-February, gas prices have been rising for a variety of reasons. Oil and gas traders had concerns over civil strife in the oil-producing regions of Nigeria, Iran was making efforts to develop nuclear weapons, and ethanol was becoming more in demand because many refiners outside of California started using it for the first time this year.

It appeared that gas prices were coming down at the end of April. Wholesale prices then spiked tremendously as retailers, worrying about a lack of supply, started buying more than what their long-term contracts allotted.

Even if gas does not reach $4 a gallon this summer, it likely will in the future.

China and India and other developing countries are also expected to increase their demand for oil — leaving the United States to compete for a smaller piece of the pie.

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