Today’s relatively “cheap” gas won’t last, says Stephen Schork, editor of the The Schork Report. This summer, gas will likely be back over $3 a gallon again.
Why?
Because refiners, the folks who make crude oil into gasoline, are getting killed. Speculators have driven the price of crude oil up well beyond where it should be on a fundamental basis, says Schork. Meanwhile, prices at the pump are much lower than they should be given that oil is now more than $80 a barrel.
The result is that the folks in the middle, the refiners, are getting squeezed. And they’re responding by cutting capacity.
If the economy continues to recover, says Schork, demand for gasoline and crude oil will gradually increase. This, combined with refiners cutting back on capacity, will eventually drive gas prices higher.
And what will $3+ gas do to the economy?
The Maginot line for demand-destruction, Schork says, is $3.30 a gallon. If gas hits that level, you’ll see Americans start to consume less of it, and the high price will begin to act as a brake on the economy.
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