CHARLOTTESVILLE (WINA) – A local gasoline wholesaler says we’re quickly going to see prices at the pump fall in central Virginia as crude prices crash due to the Russia-Saudi Arabia oil war. Palmyra resident and Virginia Fuels President John Zehler sees $1.50-a-gallon gas prices by the end of the month.
With WTI crude — the oil from which U.S. gasoline is manufactured — running $32-to-$34-a-barrel, Zehler calculates it’s about 75-cents a gallon for crude. Add approximately 70-to-75-cents for transportation, refining, taxes, and margins, Zehler says we’re looking at roughly $1.50 retail. And because the prices are crashing so quickly, he says we’ll see prices at the pump fall quickly.
Zehler says retailers want to run larger margins, but they’ll be pulled down initially by the big box stores… such as Sheetz, Wawa, Kroger, Costco, Walmart, etc.
Russia and Saudi Arabia are playing a game of “chicken” after Russia refused to cut supplies as OPEC — led by Saudi Arabia — wanted to do. During negotiations, the Russians walked away from the table. While Russia is not an OPEC nation, they often go along with what OPEC wants… but not in this case. The Saudis have decided to flood the market because they can produce oil for less cost than Russia, and therefore they don’t take as big an economic hit. Russian leaders say they can afford to take the hit because they have streamlined their budget over the years — and have run a surplus the last two.
