Gas prices expected to hold steady

An outage at an aging refinery is the biggest threat to gasoline prices.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Look for gasoline prices to hold steady in coming months unless a major event disrupts oil supply, an observer said.
Even an unsettling event -- such as a U.S. attack on Iran -- would not bring prices of 3 a gallon, said Dr. A.F. Alhajji, energy economist at Ohio Northern University.
"Three dollars is over. We're not going to go back," he said.
A major disruption in the market likely would bring prices of about 2.50 to 2.60 a gallon, he said.
More likely, however, is that prices in Ohio will stay at about 2.20 a gallon, he said.
The current prices are about where they should be, given the price of crude oil and the world's political climate, he said.
Most experts were surprised last fall when prices dipped under 2 a gallon, he said. Those prices weren't expected to last, he said.
The biggest threat to prices isn't a military attack, however, but the age of refineries, he said. The U.S. has many old refineries which are struggling to make adjustments to meet increased emissions regulations, he said.
Technical problems could lead to plant outages, which would disrupt the supply of gas. If that happens, the price of gas could go up even if crude oil prices are falling, he said.
Two and three years ago, technical problems did develop, which helped to boost prices.
"Last year, we were very lucky," Alhajji said.
Various factors
Linda Casey, a spokeswoman for Marathon Ashland Petroleum, said too many factors are at play to predict the future price of gas.
For example, refineries will be shifting in March to make summer grades of gas, which is more environmentally friendly. These grades can't be mixed with winter grades, so inventories are normally reduced at that time of year.
If demand spikes during the period where supply is being reduced, prices can jump, Casey said.
Weather is another unpredictable factor, she said.
The recent weeks of cold weather helped lead to a recent increase in prices because more crude oil is diverted to producing heating oil, she said. The current warming trend will put pressure on prices to fall if it continues, she said.
Like Alhajji, she said political factors play a big role in the price of gas. She noted that a branch of al-Qaida last week threatened to attack suppliers of oil to the U.S.
"There is not usually 'a' factor in determining prices. There are a number of things that happen that cause prices to go up and down," she said.
The AAA's daily survey showed the average price of regular gas in the Mahoning Valley on Tuesday was 2.24, which was up from 2.10 a month ago.
Tuesday's price was the lowest of any metropolitan area in Ohio by about 7 cents. Politicians and others complained last fall because the local price of gas was the highest in the state.
shilling@vindy.com