Fuel prices have gone down, up, and down again in an eventful first quarter for the petroleum industry.

The long-dreaded Cap and Trade carbon tax finally took effect on Jan. 1. This tax affects E.R. Vine’s suppliers, increasing prices by about 10 cents per gallon on gasoline and 12 to 15 cents per gallon on diesel.

Most consumers didn’t notice this new tax, simply because fuel prices were so low. Many Californians remember the $1.99 per gallon gasoline on Jan. 1.

Those low prices are simply a matter of supply and demand: domestic crude inventory levels are at an 80-year high.

Prices were driven upward in February and March by strikes at California ports and refineries, but those labor disputes are now resolved. Prices are dropping once again as we enter the second quarter.

Agricultural customers will likely enjoy falling prices in the months ahead. Our cautious speculation is that prices should continue to soften or stabilize going forward, despite Cap and Trade taxes.

Keep in mind – it’s always difficult to write about oil prices. By the time this goes to print, some unexpected industry event can move prices drastically.