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The Schork Report founder Stephen Schork on what’s behind the spike in gas prices.
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Our Phil Flynn thanks so much that it's perfect setup is that we're -- that gas prices which are climbing for three straight weeks.
The national average for unleaded is up 27.
Cents a gallon.
In the past month did you notice when he went to fill up.
Energy analyst Stephen shark is the editor of the shark report.
And -- -- I mean what do you think what's causing this will continue.
What's -- -- anomalous area is -- a rash of refinery outages have both here on the East Coast and the West Coast.
So quite frankly the market is fearful about the availability of supply we've seen very strong pricing in the cash market.
Which is certainly indicative of a shortage of supplies of this is what's driving the market -- In the near term.
The fear here is that oil prices in general or about 15% lower at this point this year the new war relative to a year ago.
In yet retail gasoline prices are higher at this point.
Now on the nymex January gasoline contract expired god -- few weeks ago.
And where it expired implies in the cash market for retail gasoline.
We could still see it in other fifteen -- twenty cent rise out gasoline prices for the consumer by the end of this month hit and that's where -- lower prices about Rudolph.
There are so many things that are lining up you know not agree to the consumer right here in gas prices also generally this time -- we usually have a quiet January.
That didn't happen I mean it's very early for gas prices to been accelerating the way they are.
It seems like I -- prices of the public going even higher from here is there anything that would stop that.
I'll right now we need to see immaterial correction in crude oil prices to have any sort of chance.
Seeing lower year on -- gasoline prices.
But as -- seeing right now the odds of that are not kid crude oil prices.
I as a -- or about 15% cheaper this year didn't war last year.
We have to keep in mind last year prices were artificially high because of speculation related to -- -- oil sanctions.
Prices in the summer collapsed.
So if we do not see is similar correction in crude oil prices this summer -- high crude oil prices high input cost.
Half -- translate into higher gasoline prices.
They will they -- -- Melissa is what we might see this year.
Well to do what we saw in 2006.
We do not -- enough refinery capacity in this country.
Over the last year we've been running our units at very high refining utilization rates the longer.
Part of you run -- in machine the greater your odds are that machine won't.
And it's got even more real time but Stephen let me ask you because we worry you know we're just reporting last week on stories that -- refineries here in the north east shouting down you say we don't have that capacity explain to people.
How is that possible wouldn't that refinery that shutting down wouldn't it be so valuable but somebody would've wanted to purchase -- Absolutely and we have had some purchases but the people who bought those.
The refineries here in Philadelphia.
Basically Wall Street and an -- line.
But there are having their own problems making money and the biggest problem is location.
Now if you cover refinery in the middle of the country where crude -- prices are very cheap.
-- yet it's a good to be -- refinery business but here on the East Coast where you have to still source of considerable amount of your accrued all.
Globally and the global principal oil is fifteen to twenty dollars a barrel higher.
The margins simply are not there so the consumer paying three dollars and fifty cents national average likely going to four dollars -- in the months ahead.
They might not like to hear that but a refinery even -- those retail prices simply cannot make money and hence they close down these units.
And now we're on this camps do -- -- Where prices are going higher and refining still cannot make money.
And we do not have any -- is short term solution to this so go into this summer -- consumers are probably looking at.
Higher year on year gasoline costs just so we -- with unemployment still so high Steven -- thanks for coming out the brutal that it spreads did.
