by Keith Laing
The News Service of Florida
Florida drivers likely won’t feel any pain at the pump in the wake of the biggest oil spill in recent history, but they might get pinched when the cleanup ends and the regulating begins.
Energy pricing observers told the News Service of Florida Wednesday that while any oil spilling into the Gulf is bad for the environment, the amount of oil produced by the BP rig that exploded would not be felt on world markets.
“If you think about it, the amount of crude spewing into the Gulf, while it’s catastrophic from an environmental prospective, it’s a drop in the bucket in terms of what we use, as opposed to say a hurricane,” said Kevin Bakewell, senior vice president of AAA Auto Club South.
“Even before the (accident), we were starting to see prices increase, which obviously had nothing to do with the spill. It had more to with an increase in demand and a weakening of the dollar, which has more to do with gas prices than anything other than supply most of the time,” he said.
Bakewell said there was going to be a slight increase in prices at the pump with the summer travel season, generally regarded to run from Memorial Day to Labor Day, about to commence. The AAA Auto Club’s Fuel Gauge Report shows that the average price of a gallon of regular gas in Florida Wednesday was $2.91, up from $2.88 and a month ago.
The highest metro area average Wednesday was $2.98 in Gainesville. The lowest average metro price is $2.86 in Tampa and Orlando.
“Typically when people feel like there’s an unjust price increase, we hear from them,” Bakewell said. “They don’t hesitate to call and they want know what we’re going to do about it.”
However, Bakewell said how lawmakers in Tallahassee and Washington, D.C., react to the spill could add volatility down the road.
Florida State University economics professor Mark Isaac agreed that the development to watch regarding gas prices after the Deepwater Horizon rig explosion was legislation. Already, most Florida officials have backed away from a proposal to allow drilling as close as 3 miles off the Gulf Coast that had the backing of incoming leaders of the House and Senate.
Likely Republican gubernatorial nominee Bill McCollum has threatened to veto the drilling proposal if it is approved by the Legislature next year under his watch, joining likely Democratic nominee Alex Sink, who has always been opposed to the plan.
Isaac said the reason there may have only been a slight uptick in prices in the wake of the spill could be that traders of oil futures are betting that the anti-drilling fervor seen in the wake of the spill will eventually subside a bit.
“They’re probably looking forward to something in the middle,” he said. “Oil markets look forward to the totality of availability in future. They had probably factored in the loosening of the regulatory climate in the U.S. for where we’re going to drill and now they’ll probably say, ‘that’s probably not going to happen.’ That could have some impact through the system and there could be some upward pressure on oil (prices), but that’s not enough to have an immediate effect.”
The effect on the politics of drilling is already clear though, Isaac added.
“Over the long term, this is not helping the case that people are saying ‘let’s expand drilling in the Gulf and Atlantic.’ That’s pretty obvious,” he said.