Question Of The Week, 5/13/07

Good morning, and Happy Mothers Day to all you Moms. The last time I bought gas I paid $2.99 per gallon for regular. At that time they were talking about a price increase. Yesterday my Wife paid $3.12 per gallon. An article in my morning paper offers a reason for the price increase and some predictions.


Gasoline reaching new highs


It costs Tyler Lowrance to see his 4-year-old daughter.

Every week, Mr. Lowrance travels from Springfield to St. Joseph to visit her. The weekly gas bill adds up to $150.

"It's hurting us pretty bad," he acknowledged, adding he has no plans to cut out the trips.

Gas prices broke through the $3 barrier last week, presenting scary scenarios of what could happen during the busy driving season.

"This year is certainly shaping up to be one in which consumers will likely see high gasoline prices throughout the summer months," the federal Energy Information Administration stated in a report released May 9.

What are frustrated drivers to do?

One proposal circulating via e-mail urges Americans to stage a gas boycott on May 15.

"If everyone in the United States and Canada did not purchase a drop of gasoline for one day, the oil companies would choke on their stockpiles," the e-mail states.

Drivers may find solace in the idea, but the boycott is based on some faulty assumptions, said Kerry Cordray with the Missouri Department of Natural Resources Energy Center.

"The main reason prices have risen has nothing to do with oil companies," he said. "It's because we're just burning it faster than it's being made."

Right now, supplies are especially tight because refineries are switching over to the summer blends.

"The reverse will happen in September or October," said John Rowe, owner of Speedy's Convenience Stores in St. Joseph.

He expects once the supply settles down, so will prices.

"It should come back down and I really look for $2.50 gas for the rest of the driving season," Mr. Rowe said. "I'm an optimistic guy."

Most Americans are more pessimistic, according to a survey commissioned by the Civil Society Institute and the 40 MPG Project. About three-fourths of those surveyed expect gas prices to reach $3.50 per gallon and one in four think they'll hit $4.

The Energy Information Administration doesn't expect prices to get anywhere close to $4. In April, the administration predicted the average national price of gas during the summer would be $2.81. That would have been 3 cents below last year's average.

But last week, the prediction was ratcheted up to $2.95 per gallon.

"There's good news on the horizon if you believe the predictions," said Mike Right, spokesman with AAA in St. Louis.

For the most part, drivers seem to be adapting to the change.

"If it was cheaper, it would help," Randy Davidson, 18, of St. Joseph said as he visited a local station.

The $3 mark triggers a sort of psychological response, but the price isn't expected to cause changes for most drivers.

"It's a lot like smoking," Mr. Rowe said. "More people talk about cutting back than actually do it."

People still take trips and still buy snacks and drinks at the gas station, he said.

"It's the big ticket items that they'll work to cut back on," he said.

Last summer, in fact, motor vehicle travel increased 2 percent, Mr. Right said.

A one-day "gas out" on May 15 won't have much impact on gas prices, but Mr. Cordray said consumers can do something. Among the suggestions the Energy Center offers are keeping tires properly inflated and your car tuned up; avoid idling your vehicle and drive slower; car pool and take public transit when it's available; switch to a more fuel-efficient vehicle when you're ready to buy a new car.

"If more people did these things, we would see the demand side apply less pressure to the market and we would see lower prices," he said.

The 40 MPG Project is pushing for the government to require auto makers to produce more fuel-efficient cars.

"People want, at the very least, to have access to higher fuel mileage cars. There just aren't that many choices in the United States," said Ailis Wolf with the organization.

Given instability in the oil-producing regions of the world, forecasters are careful about making long-term predictions about gasoline prices.

"All bets are off if there's any event internationally or a pipeline fire. That can throw a whole new variable into the mix," Mr. Cordray said.

He does make one solid prediction, however.

"Someday, we're going to see $4 gas, there's no doubt about that," he said. "People need to think about what they would have to do if prices were at that level."


This weeks Question Of The Week will be in three parts.

(1) What are you paying for a dollar of regular in your area at this time?

(2) How high do you expect to see prices go?

(3) Will we ever see $2.50 per gallon regular again?

I'll post my answer in the Comment Section Monday night.

Thanks go to:
The Saint Joseph News-Press.

God Bless America, God Save The Republic.