News & Politics - Gas prices seen hitting record high this year

mh67511 · 03-04-2005, 01:48 PM

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Gas prices seen hitting record high this year

NEW YORK - It could be a tough time for American motorists when they hit the road for the vacation season with gasoline prices poised to hit record highs.

The average pump price for self-serve gas is currently $1.92 a gallon, about 13 cents below the all-time record hit last May, and 22 cents higher than a year ago, according to the American Automobile Association. Furthermore, oil prices are at their highest level in months and still rising. The head of the Organization for Petroleum Exporting Countries has said crude could get as high as $80 per barrel, up from about $54 currently.

“All of the dynamics are in place for U.S. motorists to pay new record high prices again this year,” said AAA spokesman Geoff Sundstrom.

Oil prices are roughly 44 percent higher than a year ago, rising sharply in recent weeks due to a combination of colder weather, the declining value of the dollar and the world’s tight supply-demand balance. Instability in Iraq and underlying fears about terrorism have also played a part in the rally.

Gasoline future prices, which serve as a benchmark for most wholesale gasoline traded in the United States, hit an all-time high this week at the New York Mercantile Exchange, or Nymex, as problems at a number of U.S. refineries further added to supply worries.

It all adds up to a potential perfect storm at the corner pump, although the AAA’s Sundstrom said some gas stations “have overreacted to some of the media reports of $80-a-barrel crude and now the two-day run-up in the wholesale futures by posting 20-cent increases in their pump prices.”

Sundstrom said retailers should wait until they get supplies at their stations to see whether the price hikes seen on futures markets are fully passed through. Sundstrom said the AAA had reports of the 20-cent price hikes at pumps in Cleveland, Ohio.

An analyst with the U.S. Energy Information Administration, the statistical arm of the Department of Energy, said he would not be surprised if prices broke the record this year, but added that it’s not a given.

“We may never see today’s record Nymex gasoline price translate into a record retail price because the Nymex price represents New York Harbor reformulated gasoline, and a lot can happen by May or June, when we are looking for a peak,” said Mike Burdette of the EIA.

The record average retail price as counted by the EIA is $2.064 a gallon, recorded in late May 2004.

This may all seem like gloomy news for the average American motorist. But while gasoline prices are near record highs in nominal terms, when adjusted for inflation they are still well below the roughly $3-a-gallon peak seen in 1981.

Seems like they've said this every spring for the last few years

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I'm just glad I don't have a car and I get free rides on the bus through the university so doesn't affect me directly. I wonder how it will affect the cost of goods though, due to increased transportation costs?

I guess on the positive side it may make some people from "frugal" drivers, meaning cutting out unnecessary trips to the store that is 8 blocks away or things like that.

sick little jag · 03-04-2005, 02:26 PM

i'm glad i've got a fuel efficient car....that takes regular unleaded and not just premium only.

JW77 · 03-04-2005, 04:02 PM

Quote:

Originally Posted by mh67511

Seems like they've said this every spring for the last few years

.

I'm just glad I don't have a car and I get free rides on the bus through the university so doesn't affect me directly. I wonder how it will affect the cost of goods though, due to increased transportation costs?

I guess on the positive side it may make some people from "frugal" drivers, meaning cutting out unnecessary trips to the store that is 8 blocks away or things like that.

Yeah, I read a similar article in USAToday yesterday about OPEC's warning that oil prices could jump to around $80 a barrel within about two years. Now, the guy did say that it probably wouldn't last long, but even a short period with prices at that level could possibly cause a huge spike in production and transportaion costs.

As far as short trips (like the one you described) by the average driver, it might affect some people, but I don't think it would really make much of a difference in terms of trips like that. I do think people would think twice about longer trips though.

**Mio** · 03-04-2005, 04:10 PM

Here in Canada were paying $2.33/gal in some places.

WalkingOnSunshine · 03-05-2005, 09:34 PM

Quote:

Originally Posted by JW77

As far as short trips (like the one you described) by the average driver, it might affect some people, but I don't think it would really make much of a difference in terms of trips like that. I do think people would think twice about longer trips though.

Honestly, I don't think it is going to really affect most people with either of those examples. I think if/when prices go up people will complain and such, but life goes on. And, people will hate paying the price, but will continue taking trips either long or short. I think this way because most people in this country complain, but do not change their ways. I am guilty of doing the same, though.

Lorna · 03-06-2005, 08:08 AM

The price of petrol is ALWAYS going up over here! It was 89.9p per litre at a petrol station I saw recently! I usually pay between 79-85p per litre, which is around $8 per gallon!


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