GRAND RAPIDS, Mich. (WOOD) — Continuing uncertainty over global oil supply contributed to the recent sharp rise in gas prices in Michigan, GasBuddy says.
“This is really a story of a continued imbalance,” GasBuddy petroleum analyst Patrick De Haan told News 8. “Demand is far higher than supply and we continue to see inventories drift lower and that’s pushing prices higher.”
The price of a gallon of regular unleaded at most stations rose to about $4.39 per gallon Monday — a record for West Michigan. Other Midwest states started to see a similar increases Tuesday.
De Haan was surprised the jump to about $4.40 per gallon hadn’t happened in March, when the price surge started.
“This is kind of where they should have been all along,” De Haan said.
He said many stations were selling at a much lower profit than usual and are now “getting back to that normal behavior.”
He said international factors are affecting the situation. The European Union is thinking about cutting of Russian oil because of Russia’s invasion of Ukraine and China is seeing a recovery in COVID-19 cases. That means an imbalance of global supply and demand that has pushed the price of oil up about $10 per barrel to around $105.
De Haan said the wholesale price of oil has been unusually volatile this year. It’s changing even more rapidly now than during the 2008 recession.
“We’re seeing a lot of that volatility play out in what we’re paying at the pump,” he said.
He said with supply down and that volatility, things are unlikely to get much better before the summer travel season starts around Memorial Day, even with Michigan’s habit of seeing hike-and-decline cycles.
“Bottom line: Expect these prices to stick at over $4 a gallon,” De Haan said.
He said it’s unlikely gas prices will hit $5 per gallon, though he noted diesel prices are already at or above that level and could still rise because of the tight market. It’s the same situation for jet fuel and De Haan said that could make airline tickets more expensive this summer.