17 Jul Gas prices expected to keep rising into mid-August
John Courtney is already feeling the pain of rising gas prices.
In a little more than a week, pump prices locally have jumped by 9 cents a gallon, squeezing the budgets of drivers like Courtney, who says the $20 he budgets each week for gas isn’t taking him as far.
Analysts say that upward trend is likely to continue for at least the next few weeks, possibly adding as much as 20 cents to the cost of each gallon, which would put the average pump price in the Buffalo Niagara region back near the $4 per gallon mark for the first time since February.
The increasing prices are tough on Courtney, whose South Buffalo family is supported by his disability benefits and his wife’s biweekly paychecks.
“I have kids; $20 does nothing,” he said. “And I just keep watching prices go up and up and up.”
Retail gas prices in the region averaged a little more than $3.79 per gallon Tuesday, up nearly 9 cents in the past eight days, according to the AAA Daily Fuel Gauge Report.
A 10 percent increase in the cost of crude oil, coupled with tensions in the Middle East and the normal increase in demand for fuel during the peak driving season, has caused a spike in gas prices nationally, analysts said.
Nationally, the average price of gas shot up by 14.8 cents in the last week. Gregg Laskoski, a senior petroleum analyst for Gasbuddy.com, said he can see the national average increasing by 20 cents — not quickly, but in increments — between now and mid-August.
Michael Newman, Noco’s executive vice president, feels it’s unlikely that the increase in retail gas prices will last much beyond the next few weeks.
“As we get closer to Labor Day, we start to see the market soften up significantly,” he said. He estimates prices will “come off” by late summer or early fall.
Will gas reach $4 per gallon in Buffalo Niagara this summer?
Newman isn’t sure. And while Laskoski doesn’t think it’s likely that the average price nationally will hit $4, the 20-cent-per-gallon increase he thinks is possible would put gas prices locally on the brink of $4 a gallon.
Steve Pacer, a spokesman for AAA of Western and Central New York, said the $4 mark is typically seen as a key psychological threshold for consumers. Once that’s crossed, consumers are more apt to start adjusting their spending habits to make up for the increase in gas costs, he said.
Motorists in Western New York aren’t alone in feeling the pain of rising gas prices. Colorado, Idaho and Utah are the only states that didn’t see a rise in retail gas prices this month. And the increases have been especially sharp in Indiana, Michigan and Ohio, where drivers are dealing with a 35-cent-per-gallon increase.
The national price of gas, now $3.63 per gallon, is about 16 cents lower than what drivers are seeing in Buffalo Niagara.
Newman said New York’s higher taxes on gasoline account for much of the difference between prices here and elsewhere. New Yorkers pay about 80 cents in taxes on every gallon of gas, and that’s not including the 12 cents per gallon stemming from renewable fuel laws that charge oil refiners and importers “an additional tax,” Newman said.
Political unrest also has played a role in the latest jump in gas prices, especially the recent military coup in Egypt. While Egypt isn’t a big oil producer, it plays a key role in the transport of crude oil from the Middle East to the West. About 3 million barrels of crude oil pass through the Suez Canal each day, and political unrest in Egypt could jeopardize the flow of that oil.
“That makes financial analysts nervous,” Laskoski said.
As a result, the price of a barrel of crude oil, which was about $93 in late June, jumped to just under $106 Tuesday. Generally, for every $10 that crude oil increases, retail gas prices go up about 25 cents, Laskoski said.
And then there are the normal seasonal factors that can affect gasoline prices in the short term. Laskoski said the real “wild card” in rising gas prices as summer continues will be the number of storms spawned during the current hurricane season and whether their paths take them through key refining states.
States by the Gulf of Mexico — such as Louisiana, Texas and Mississippi — may have to shut down their refineries if a hurricane is projected to reach them, which can push up short-term prices by disrupting the immediate supply of fuel. Once a refinery is shut down, reopening it isn’t a quick process, causing “price volatility,” Laskoski said. Pacer agreed, noting that what people are paying at the pumps could vary in “the blink of an eye” based on what happens with crude oil prices and conflicts in Egypt as the summer plays out.
Courtney said he’s already adapting to the rising prices. He now seeks out gas stations that offer discounts for customers who pay in cash.
Buffalo resident Rob Stonebrook said he has become used to the regular fluctuations in the price of gas.
“It is what it is,” he said.
And he tries not to live on such a tight budget that a rise in gas prices leaves him short on cash.
“I don’t buy as many electronics or a new cellphone every two years,” the Buffalo resident said. “People blow their money” and then “wonder why they can’t afford gas,” he said.