 As Fayette drivers are aware, gas prices just keep going up, and up, and up, and....
Adjusted for inflation, the price for a barrel of crude oil is the highest that it has ever been.
Friday’s closing rate for crude was $106.23 per barrel. The price of crude during the nation’s last serious energy crunch 28 years ago was $39.50 a barrel.
Big difference?
According to the U.S. government’s Energy Information Administration, that equals $103.76 in today’s money.
The EIA also claims that the price of crude has the most direct effect on the cost of gasoline, accounting for nearly 70 percent of what consumers pay at the pump.
What does this mean?
It means that today’s drivers now pay more for gasoline than even those who endured long lines to fill their tanks during the second oil shock of April 1980.
The EIA’s newsletter “This Week in Petroleum” reported on April 2 that, “The U.S. average retail price for regular gasoline rose by 3.1 cents to reach a new all-time high of 329.0 cents per gallon, surpassing the previous high set two weeks earlier.
“Prices on a regional basis increased throughout the country as well.”
Diesel prices have climbed even higher. The EIA stated that diesel is up 117% nationwide from just a year ago.
Diesel at nearly $4.00 per gallon has adversely affected the trucking industry across the country. Truckers based in Fayette County are feeling the effects of soaring prices.
Woody Conger operates ASAP Trucking in Tyrone.
“Most of our trucks are owner-operators, meaning that most of these guys pay for their own fuel,” Conger explained. “It’s been extremely hard on them.
“It has also made it harder for us to add new drivers.”
Rusty Bowman, a spokesman for Allan Vigil Ford in Fayetteville, noted that the entire automotive industry is down.
“We haven’t been hit here in Fayetteville as much, but the auto industry as a whole is going in the same direction as the housing market,” Bowman said. “The biggest thing that we’ve seen here is that people are staying away from the diesels,”
The EIA’s website lists a variety of factors responsible for skyrocketing diesel costs. Most other countries rely even more heavily on distillates and diesel for overall transportation than does the U.S., and refining capacity is tight worldwide.
According to EIA spokesman Jonathan Kogan, U.S. diesel fuel prices are more and more affected by competing international demand for refined distillates.
Kogan’s organization was established concurrently with the U.S. Department of Energy in 1977.
“We are set up with statutory independence,” Kogan said. “Our job at the EIA is solely to collect information and make predictions on all matters relating to energy.”
The EIA’s latest short-term energy outlook was published on March 11. It predicts gas prices to peak in the Spring of 2008, with some regions of the country exceeding $4.00 for a gallon of regular unleaded gasoline.
The report also indicated that the annual average crude oil price, which was $72 per barrel in 2007, is projected to average $94 per barrel in 2008, but then ease somewhat to about $86 per barrel in 2009.
How accurate are these predictions? Like weathermen, governmental and private oil watchers often get it wrong.
Daniel Yergin, a Pulitzer Prize winning author of several books on the oil industry, heads a group called the Cambridge Energy Research Association.
Although Yergin is often quoted as an expert in the field of predicting global trends and price structures for crude oil, he assured CNBC viewers in August 2007 that, “Early next year we expect to see prices drop into the mid $60s for a barrel of crude oil.”
Jason Toews is the co-founder of a Minnesota based family of websites that tracks local gas prices.
Toews does not try to predict prices, he simply wants to point customers to the lowest ones available.
“No one really knows what is going to happen with gas prices in the future,” Toews said. “The best we can do is to try to pay as little as we can for gas now.”
Toews’ websites allow commuters to post gas prices when they see them, offering up to date pricing data throughout major metropolitan areas. One such site is www.atlantagasprices.com.
“We try to put pressure on higher priced stations. Everyone sees on the news that the price of oil is at an all time high, but some gas stations are still overcharging,” Toews said.
An April 2 drive down highway 85 in Fayette County lent some credibility to Toews’ point.
A 10 mile stretch of 85 from Evander Holyfield Highway to Goza Road contains 12 different service stations, with regular unleaded prices ranging from as low as $3.15 (Quicktrip at hwy 85 and hwy 279) to a high of $3.30 (Chevron on 85 south across from Whitewater Middle School).
“Gas prices vary from location to location based on a number of different legitimate factors, but a lot of it is based simply on pricing strategy,” Toews said.
“Stations will generally charge as much as they can get away with charging.
“What we urge citizens to do is only buy from the cheaper stations.”
Toews’ believes that his strategy works better than a general gas boycott, because most people are unable or unwilling to participate in a large scale boycott.
State governmental officials also receive protests about high prices.
“We do get a lot of complaints about disparities in price between individual gas stations,” said Shawn Conroy, a spokesman for the Governor’s Office of Consumer Affairs.
Conroy explained that his office can legally step in and address issues such as price gouging after a natural disaster, but that Consumer Affairs has no jurisdiction over the routine fluctuations in price from station to station.
“I generally tell people to buy the cheapest gas that they can find,” Conroy said.
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