Fill ‘er up and up and up

A whack in the wallet from your local gas pump — to start the summer driving season. On the first official week of summer, we are paying record high prices for gasoline — up, nearly 15 cents a litre from only one year ago. Why? The answer to that question lies, half a world away.

It’s enough to press the buttons of any driver. The jump at the pump it a little tough to take. Especially on the first weekend of the summer.

Roger McKnight, En-Pro: So what you see at the pumps tomorrow would be $1.43.9 would be a record high price. It’s all a result of situations 6,000 from here.”

Six thousand miles from here is the Iraq refinery centre at Baiji — where fundamentalist militants are threatening to disrupt the flow of oil from the Middle East. Something that makes North American investors very jittery.

“All crude pricing and gasoline pricing is a month forward. So what they’re saying is a month from now this thing is really going to be a mess.”

That mess would clearly disrupt the flow of Middle Eastern oil. But North America has a large reserve, and production of the West Texas crude that is used to make gasoline here — is not threatened at all.

“There are two different types of crude. There’s West Texas Intermediate which is the North American crude. And then there’s the rest of the world crude which is called Brent.”

The problem is — if that supply of Brent is threatened for the rest of the world, it puts upward pressure on the price of North American crude. Hence, higher gasoline prices here. But McKnight doesn’t believe that rising prices will last through the summer: “I don’t think it’ll be two or three months. I think it’ll be two or three weeks to a month. Then everybody’s going to say ‘OK, enough of this’. This is affecting inflation. It’s also a mid-term election year for Mr. Obama so you get politics involved. This thing is going to go 3 weeks to a month and that’ll be it.”

So how high will these prices go? McKnight doesn’t see them going up a lot more — maybe a penny or two a litre. Somewhere in the $1.46 range. And then, providing nothing really drastic happens in the Middle East, they’ll start sliding backwards again. And perhaps by the end of the summer, we’ll be back around the $1.30 range that we’ve gotten used to over the last year or so.