The gasoline price battle is going to get ugly, says Bob Kerrey
The American Petroleum Institute’s Bob Kerray is out with his latest analysis of gasoline prices and he has a point.
In a blog post last week, Kerrey pointed out that gasoline prices have been rising and that the oil market is likely to be more volatile than anticipated.
“Oil prices, especially the cheap crude, have been going up and up,” Kerrey wrote.
“As we saw with the oil crash in 2008 and 2009, the supply side is the most volatile.”
As for the current price spikes, Kerray wrote that they are mostly “an aberration in a trend” and that there is “little reason to think that these increases will end anytime soon.”
He also said that the current supply-side price spikes are not a surprise to him.
He added: “The supply- side price increases are more indicative of a general increase in supply rather than a trend that is a direct result of the price increase.”
The last time oil prices were higher was during the early 1990s.
That period was characterized by a surge in oil prices and by the end of that period, it was clear that OPEC was pulling the strings behind the scenes to get the prices to where they were.
The market was also responding to the global financial crisis and the collapse of the Soviet Union.
As a result, the price of oil was falling, and so was the value of the dollar.
That brought in additional demand for oil from other nations, and the prices for oil were then falling again.
As Kerrey noted, prices have since stabilized and are in the mid-single digits.
Kerrey’s analysis does not come out and say that prices are likely to stay where they are at anytime soon.
What he does say is that the price increases in the United States are an aberration, and he points to the supply-sides as the culprit.
So, he has an argument.
I would have thought the supply of oil in the U.S. was in decline and prices would go down.
But I also would have expected the price to go up, and I would have also expected the global oil markets to respond to the surge in demand for petroleum and to have some amount of supply left over for the U,S.
And now, I can’t find any supply left, and instead, we have a bunch of oil prices that are going up.
At least for now, the demand side seems to be the culprit in the current surge in gasoline prices.