March 15, 2011 – Mason Williams
The price of gas is expected to spike as a result of the Japan earthquake, energy experts warn. Japan, which is the world’s third largest oil importer, after the United States and China, has lost nearly a third of its oil processing capabilities due to the earthquake and tsunami.
Despite a small dip in global oil prices recently due to concerns about decreased Japanese consumption from the economic slowdown expected to result from the devastation, the price of gas is expected to return to even higher levels very soon.
The refineries on the U.S. west coast are expected to meet much of the lost processing capacity for Japan which could reduce the gasoline available in western states, thereby exacerbating already rising gas prices.
While Hawaii has already crossed the symbolic $4 per gallon threshold, California is close on its heels with an average of $3.954 per gallon on Monday. This is 8 cents higher than last week and 89 cents higher than this time last year.
On average, gas prices in the U.S. have risen 4.7 cents to $3.567 this week, which is 78 cents higher than last year.
This upward trend begs the question as to whether gas prices will cross the $5 per gallon threshold in the near future. Some experts argue that even without continued Middle East unrest and lost Japanese supply, gas prices are still headed to $5 per gallon. China is predicted to increase its daily consumption from its current 9 million barrels per day to 15 million barrels by 2015. India is projected to increase from 4 to 7 million barrels per day in that same time period. America, with its 20 million barrel per day habit, is expected to remain steady or rise slightly.
This increased consumption alone could push the price of gas over the $5 per gallon level in the next few years, if it doesn’t reach that milestone even sooner.