Charlottesville gas prices are up $0.23 from last month due to the annual “spring climb” in prices which happens each year around March. During this time, oil refineries conduct maintenance in order to adhere to the federal mandate for burning fuel during the summer months, according to the American Automobile Association.
The switch from winter to summer blends of gasoline must be completed by June 1.
University Economics Prof. Eric Young said although this is a trend at the moment, gas prices are typically set far in advance by different companies in what is known as “future contracts.”
“The price of such contracts depends critically on expectations of future prices — if someone believes the price will rise in the future, the demand for future contracts will rise as buyers try to lock in current prices,” Young said in an email statement. “This expectation will tend to push up the price of oil today, as sellers don’t want to get stuck with low prices.”
Martha Mitchell Meade, manager of public and government affairs for AAA Mid-Atlantic, said another reason for the recent rise in prices is better weather, which leads to more road travel. However, prices are much lower in comparison to previous years.
Nationally, prices are up 44 cents in the past month, Meade said.
“Lower-than-expected prices for crude oil and ample supplies … should help keep pump prices relatively low compared to recent years,” Meade said in an email statement. “While the seasonal increase in gas prices is well underway, relatively low oil costs continue to provide drivers with year-over-year savings at the pump.”
The effect of low gas prices on the economy varies from country to country, with the United States in a unique situation, Young said.
“In countries like the U.S., which is essentially neutral in terms of oil imports and exports, the aggregate effect is small, but low prices reallocate wealth from oil-producing regions — North Dakota, Texas, Oklahoma — to oil-consuming regions — New England [and the] Midwest,” Young said. “For countries that rely almost exclusively on exported oil, like Venezuela and Russia, the low oil prices have cratered their economies.”
Although gas prices remain at a stable level now, Young said they are “volatile over short time periods.”
Forecasting prices can be difficult and additional factors to consider include China’s economy, oil inventories and how Iranian oil exports affect the global supply, Young said.
“Any of these factors could push the price up or down rapidly,” Young said. “The key trend is that nobody knows what oil prices will do.”
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