NewsNation | February 19, 2013
>>> gasoline prices have now risen for 33 straight days for record highs for this time of the year. the national average of regular is now $3.75 a gallon, up two cents just since yesterday. up 15 cents in the past week and up 45 cents in the past month. some gas stations in california are charging over five bucks a gallon. economists say the rapid increase poses a threat to our fragile economy. joining me now oil industry analyst cnbc contributor john killbuck, thanks for joining me.
>> good to be here.
>> i heard it's be the blend. we're getting ready to switch to the summer blend and this is why. is that a legitimate reason here?
>> you know, normally in past years it would. there's a certain time of year where that's happening. but what's really happening here, the refining industry is doing what the airline industry is doing and that's reducing capacity really massively. we lost over a million barrels of refining capacity just to shutdowns over the last year now.
>> why would they voluntarily do these shutdowns?
>> believe it or not, they weren't making enough money for themselves and they decided to get out of the business. i'm fearful normally i can tell you why, it has to deal with cutbacks by opec. war issues. this time, it may be different. this time we may not see the price break in coming months that i'd expect to happen because of demand at the pump. with the refineries off of the market, we could be stuck with these high prices for some time.
>> john, that's scary, i think that speaks to the helplessness, you've got folks, you know this, 45-minute, hour-long commutes. where i'm from in texas, you see that daily. when you have the refineries, as you put it, a feeling they're not making enough money. this is a choice made. as a result, we're looking at 33 straight days of record highs. this is why people feel so helpless when they talk about gas prices . or they feel like we're giving them a line when explaining what's happening. it's memorial day or something out of the air.
>> i agree, i'm one of those people who give that line sometimes. i like to think it's rationally based. that's why i'm laying it straight out to everybody here what i think it really is. what's frustrating, i think it's going to turn to anger. we're producing all this crude oil . we're going to become one of the biggest producers in the world over the next several years. but if we don't have the refineries to turn it into gasoline, we're not going to --
>> what is the logical pushback here? we're talking for example, what's happening with the sequester. folks could be losing their jobs, the economy is fragile, it's recovering. this money adds up and it takes away in some cases food, paying for rent. this is a major dent when you're paying five bucks a gallon in california.
>> this is part of a triple threat to our economy. the sequester as you say, now these high gasoline prices and the payroll tax increase that hit are all going to be very problematic for the coming gdp quarters coming up. and the american people , you know, until just recently had fought back against gasoline prices by driving less. only in the past several weeks, that the employment picture proved, we were seeing that down. before that, down 4% 6% week in and week out. this is a tough one to get out of if the refineries don't get bought up.
>> if we're looking at 45 cents up in the past month, what are we looking at over the next two weeks?
>> the approaching $4 a gallon mark has been where consumers pull back and prices stabilize and go down. i think we're going to see that again. that this will be the breaking point. but we are, as you say, see $5 and start to go over $4 for sure, national average in my view.
>> john, thanks a lot.