It’s easy to see that gas prices have risen since the early days of 2016 when a gallon of gas cost as much as a gallon of milk. Gas prices are closely tied to oil prices and oil prices have rebounded from 15-year lows in January.
While still down nearly 20 percent from this time last year, the crude oil commodity has rebounded more than 28 percent in 2016, bringing gas prices up with it. Although taking a dip in the past week oil prices appear to have returned to profit-driving levels for oil companies.
Part of this oil climb is the simple concept of supply and demand. As the big oil producers in the Middle East were continuing to pump out more oil even as supplies were already at record highs, the demand for all that oil went down. As the demand went down, prices fell with it.
When prices fall, oil companies can’t afford to keep up that level of production and so oil production slows down. This recent uptick in oil prices reflects that decreasing supply and increasing demand.
The International Energy Agency listed a few other reasons that oil has stabilized. Canadian wildfires cut off some of the nation’s supply while militant attacks in Nigeria and political instability in Venezuela have brought down the oil supply as well.
Also, when oil was so cheap, developing nations such as India began using a lot of it, driving up demand.
In Wisconsin, we can expect to spend about $10 more at the pump every time we fill up our cars. Continued volatility following the British referendum leaving the European Union and the a decrease in the expensive fracking business to recover oil from shale geography of North Dakota and Texas will likely have further impact on our price at the pump.
Crop prices (June 14)
Rio Creek Feed Mill – Algoma
|Commodity||Price (per bushel)||Basis|
Fox River Valley Ethanol – Green Bay
Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).
Gas Price Averages
United States: $2.37
United States one year ago: $2.80
Wisconsin one year ago: $2.79
Northern Door: $2.76
Sturgeon Bay: $2.72
Gold: $1,288.50/troy ounce
Silver: $17.40/troy ounce
Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money, Vox.com