Oil Industry Analyst: Local Gas Prices Could Soon Be As Bad As California
BOSTON (CBS) - New England could be the new California when it comes to gas prices, according to oil industry analyst John Kilduff.
Earlier this week, AAA Southern New England reported the average price of a gallon of self-serve, regular in Massachusetts is now $3.49.
Find: Best Gas Prices Near You
That's 11 cents above the national average.
Why? The main reason is a lack of gas refineries in this part of the country.
"Just this week, Hess announced the closure of a big refinery that makes just gasoline in New Jersey," Kilduff told WBZ NewsRadio 1030 Friday.
He said oil companies are cutting back massively in refining capacity and that means we're all going to be paying the price for that.
"More often than not, the price will be hovering around that $4 a gallon mark because of just how low we are in refining capacity. They have closed refineries on the East Coast left and right. We're going to be heavily reliant on gasoline imports from other parts of the world and other parts of the country."
"Constrained supply," Kilduff said, "just like they have in California, gets you $4 a gallon gasoline in no time."
"The East Coast is going to become just like California in terms of having a much higher than national average and extreme vulnerabilities to various stories that emerge," he said, "whether it's Middle East tensions or other refinery problems.
But if the demand for gasoline is so high and prices are up, why are these companies closing refineries?
"The focus right now is on the glamour of producing oil around the world and here, even natural gas is seen as a dirty business that they just don't seem to want to be in," Kilduff said.
"It's the energy industry seemingly working against consumers."
But, Kilduff says there is a silver lining to this cloud.
"A little bit of pain at the pump is a good sign for all of us in terms of our economy going forward."
