Dan Nielsen: Killing time, burning gas and prognosticating | Business
Traverse City had Michigan’s lowest average price on gasoline at the pump last week, $ 2.56, according to the AAA.
The national average was up 12 cents a gallon from the previous week to $ 2.76. This is the highest average price that Michiganders has paid more than two years ago since September 2019.
Last week’s drivers in Marquette paid $ 2.76, Detroiters paid $ 2.75, and residents of Grand Rapids and Lansing paid $ 2.77. Saginaw had the highest price in the state, $ 2.78.
It’s winter in the north of the country, so it’s not surprising that local gas prices are reasonable here. Traverse City residents know that our gas prices usually soar like a helium balloon during the tourist summer months. So we enjoy our comparatively low fuel prices for as long as we can.
Gasoline prices are currently increasing for two main reasons.
First, crude oil prices have risen.
Second, an unusual cold spell rolled over Texas, causing problems with refineries and pipelines. The freezing temperatures made the working conditions outdoors dangerous for the employees. The cold shut down three refineries in Port Arthur, one in Corpus Christi, one in Beaumont, and one in Baytown. A Houston refinery operated at minimal capacity during the freeze. A refinery in Galveston Bay has ceased most of its operations. A refinery across the state line in Baton Rouge, Louisiana, struggled during the cold spell.
Power outages stopped the flow of crude oil on Enbridge’s line 59, which runs between Chicago and Cushing, Oklahoma.
So gas prices have risen because the raw material costs more and there is a bottleneck at the production site. This one-two punch hits consumers right in the paperback.
Many of us no longer drive as much as we used to because of the pandemic. So slight fluctuations in the price of gas do not cause us too much concern. However, higher fuel prices lead to higher transportation costs for packages, boxes and bags.
The gas price can stabilize.
But other price hikes could be on the way. Leave it to economists to give us cause for concern.
Rumors on the internet last week suggested that some investors are thinking far ahead of us as mere consumers. No wonder, because successful investors always think far into the future. Your predictions are not always correct. But sometimes they are, and then you can make a lot of money.
The rumble in this crystal ball goes like this: Interest rates were low during the pandemic. Now that things seem to be improving in the health sector, the economy will likely recover. The Biden administration is pushing for further stimulus – in the form of a $ 1.9 trillion recovery program and possibly rebuilding US infrastructure – that could accelerate such a recovery.
When the economy recovers, consumers will spend more. In response, financial institutions are likely to raise interest rates. This in turn will force manufacturers to raise prices. Inflation could determine the world economy. Investors who seem to believe in this scenario last week have started selling the riskier items in their portfolios.
Of course, for every economist who sees this result in the cloudy crystal ball, there is another who does not see inflation in the swirling mists.
All of this fortune-telling is well beyond my financial knowledge.
I can’t even predict what a loaf of bread will cost next month. Actually, I don’t know what bread costs today. My wife does a lot of our shopping, and when I do this job I tend to ignore individual price tags and just add what’s on the list to the cart. Maybe that’s why the last balance at the cash register always drops my jaw. The devil is in the details.
But how much we spend on bread is low on my personal list of worries. I suspect a loaf of bread costs somewhere near what a gallon of gasoline sets us back. My wife’s weekly commute uses several liters of gasoline. This is a bigger financial detail than the single loaf of whole grain we typically consume in a week.
Higher gasoline prices not only make commuting more expensive, but also visiting relatives across the state and driving to a vacation destination.
For much of the past year, I felt like I was killing time, waiting for the coronavirus bubble to burst and go away. Coronavirus fears separated me from my parents and siblings for a year, so our gas prices on that front were zero. Last summer my wife and I went on vacation locally, but we burned a little gasoline for a couple of day trips to the beach.
I look forward to the day when fossil fuels take a back seat to alternative energy sources.
For now, however, I hope this pandemic will quickly make its way back into the history books. Then my wife and I could safely visit our families – and burn a little more gasoline in 2021 than in 2020.