DeKalb experiences relief at the pump
September 8, 2006
DeKALB | In the last month, DeKalb residents have witnessed gas prices fluctuating from $2.75 to $3 and then back to $2.75 a gallon with disgruntled remarks.
Tancred Lidderdale, senior economist at the Energy Information Administration, said the price of crude oil is the main factor driving up gas prices.
“The demand out-paced production, though we are not running out of crude oil,” Lidderdale said.
There is a direct relation between crude oil prices and gas prices at the pump, said NIU economics professor Khan Mohabbat.
“As crude oil prices go up, gas prices go up,” Mohabbat said.
Mohabbat said there is a six to nine month lag period between refining oil and getting it to the pump.
Lidderdale noted that seasonal effects also play a role in the price of fuel.
“Gas prices are higher in the summer than in the winter,” Lidderdale said. “Prices will be starting to fall over the next couple weeks.”
With warmer weather also comes a necessity for operation modifications.
“With warm weather, a special formula is required to lower emissions, which is also more expensive to produce,” Lidderdale said.
Mohabbat was impressed by Americans’ lowered gas consumption over the summer.
“The demand side was surprising that the American public had reduced consumption,” Mohabbat said. “I have to give credit to the American consumers.”
Lidderdale also said Hurricane Katrina affected gas prices over the summer because some refineries were forced to close.