Lower Gas Prices May Depend On Heating Oil Supply
ST. LOUIS, MO. (KTVI) – Tuesday was a busy day for several gas stations located along Highway 141 in Fenton. Several drivers found gas under $3 a gallon and filled up over fears that Superstorm Sandy might send prices skyrocketing.
“It’s not going to stay this low,” said one customer.
Sandy shut down several refineries which would normally indicate a price increase is on the way.
Some experts disagree. They say so much traffic was grounded from Sandy, that the amount of gas saved will outweigh the amount lost.
Bill O’Grady is the chief market strategies for Confluence Investment Management in Webster Groves.
He points out that when a massive storm hits, fuel savings can be negated by other factors. One of those factors is millions of people without power turning to generators for help.
“A typical generator will burn anywhere from 5 to 10 gallons of gasoline a day which is more than the person normally drives,” said O’Grady.
He predicts Sandy will have little influence on gas prices in St. Louis. O’Grady says one big reason is that the St. Louis area fuel supply comes from other areas including the Gulf Coast.
O’Grady believes there are factors bigger than a Superstorm that could contribute to which direction gas prices will be going.
One big factor he’s watching right now is the heating oil supply. O’Grady says that supply is historically low.
“So the industry is suddenly going to find itself short heating oil and needing to ramp up heating oil supplies,” predicts O’Grady.
In order to turn crude oil into heating oil one of the by-products is gasoline. That could boost gas supplies which could lower prices.
“It could lay the potential for weaker gasoline prices in the spring and summer of next year,” said O’Grady.