Tony Dobrowolski: Stability over volatility
You've got to admit we've had some pretty unpredictable weather lately.
Since Christmas, it's gone from record-setting cold to record-setting warmth and back again at least three times.
We can blame Mother Nature for the fluctuations, but it's really our fault, the result of the human race. Tweaking the environment by putting literally thousands of pounds of fossil fuel emissions in the atmosphere every day around the world has obviously taken its toll.
Ironically, the price we pay to obtain those fossil fuels to drive our motor vehicles can often be as volatile as the weather.
GasBuddy.com recently released its gas price forecast for 2014. Listed at the top of the company's top 10 petroleum points of controversy for 2014 is this one: wild price swings.
"Volatility in the U.S. gas market is here to stay," GasBuddy.com reports. It cites very uneven crude prices, and equally uneven regional refining that it predicts will "lead to gyrations" between 30 and 75 In cents a gallon or more for given localities.
It's not easy making long-term predictions. There's too many unknowns to consider. Variables can materialize out of nowhere. Given what happened in 2012, could anyone in April really have predicted that the Red Sox would win the World Series seven months later? In Massachusetts last week, the average price for a gallon of regular was $3.47, according to AAA Southern New England. That average was six cents higher than a month ago, and 16 cents higher than the national average, which was $3.31 per gallon as of Friday.
But last week's price in Massachusetts was also just two cents lower than it was at the same time last year.
Mary Maguire, a spokeswoman for AAA Southern New England, said volatility is always an issue in the gas pricing market, given the unending political turmoil in petroleum-producing areas around the world. It's called the "fear premium" or "risk premium," she said, based on the speculation that occurs when determining whether the demand for gasoline will rise if the supplies are disrupted in North Africa or the Middle East.
But she said AAA doesn't expect a major increase in the average gas price in Massachusetts this year.
"In 2013 we saw lower average prices for gasoline than we saw in 2012," Maguire said. "AAA's projection is that we'll probably see a lower average in 2014."
The difference could be minuscule, "only a couple of pennies," she said.
"We base it on substantially increasing our domestic production," Maguire said. "That makes us less reliant on foreign oil. And they're making more fuel efficient cars in the U.S."
GasBuddy.com predicts the average gas price in Massachusetts will range between $3.40 and $3.65 a gallon this year, a lower range than is predicted for Connecticut, Rhode Island and New Hampshire (Vermont and Maine are also included in Massachusetts' category).
If you own a business in
Berkshire County that depends on transportation the chances are you watch the gasoline forecasts pretty closely. Transportation to the eastern part of the state from the Berkshires has always been more costly than from other areas because the distance is greater. Coming the other way, our geography has always been a hindrance because so many Berkshire municipalities are located so far from the Massachusetts Turnpike. This has always been an issue, but the dotcom-style business climate that we currently operate in has magnified it even more.
Efforts to alleviate our transportation issues over the years have never really solved these problems. Out here, on the fringes of Western New England, we perennially operate with one hand tied behind our backs.
The last thing we need is higher gas prices this year. Let's hope volatility doesn't triumph over stability. We can handle wild fluctuations in the weather in Berkshire County. We can't when it comes to fuel.
Tony Dobrowolski is the business
editor of The Berkshire Eagle. He can be reached at (413) 496-6224.