Gas prices hit peak

 Uncategorized
Apr 062004
 
Authors: Lindsay Robinson

The nationwide gas price average reached an all-time high at

$1.770 for a gallon of regular unleaded Tuesday.

Ron Phillips, chair of the economics department, estimates that

by the end of the summer, gas prices across the nation will top $2

a gallon and will likely hit $3 a gallon in some areas.

He said production of gas should soon be on the rise, but the

impact may not be felt in the form of lower pump prices until

September.

“The thing is, because of summer there’s going to be an increase

in demand, so that’s going to keep prices up. They might not be

coming down until the fall,” said Phillips. “They may not peak out

until August.”

The average price for a gallon of regular unleaded gas was

$1.717 in the Fort Collins-Loveland area Tuesday, according to

www.fuelgaugereport.com, a AAA-sponsored Web site.

Gas prices in Fort Collins are among the lowest in the state.

Prices in Vail are now more than $2 a gallon, according to the Web

site.

Mary Greer, director of public relations and government affairs

for the Colorado branch of AAA, said prices here could be

worse.

“We haven’t broken our record yet. While Colorado’s prices are

up, we’re not seeing the wild price-spikes that are being seen in

other states,” she said. “It’s hard to predict what will

happen.”

There are many factors contributing to the current spike in

prices, including the issue of supply and demand.

Political science professor Chuck Davis said the recent spike in

prices is due mainly to an Organization of the Petroleum Exporting

Countries decision to cut oil production by 1 million barrels a

day.

“Because the U.S. is dependent on foreign oil for a sizeable

percentage of its gas and oil consumption, there is a direct impact

that occurs when the major producer, in this case the OPEC

coalition of countries, restricts output,” Davis said. “When they

restrict output, that means prices rise.”

Greer attributes the problem partially to high crude-oil prices.

One barrel of oil, which can produce 42 gallons of gas, costs

around $37.

“Because the prices have been so high, refiners have been

unwilling to purchase additional supplies,” she said.

According to the American Petroleum Institute, there are a

variety of smaller issues that add to the problem created by a high

global demand for oil when supplies are restricted.

These factors include a growing U.S. economy, new restrictive

fuel specifications and increased sport utility vehicle popularity.

SUV sales were up 18 percent in 2003, while car sales declined,

according to the API.

While high gas prices may put a dent in some people’s wallets,

Phillips said the spike in costs might not be as disastrous as some

people believe.

“It might even help in the long run because people might start

thinking of alternative ways of getting around,” he said.

Greer said there are many ways consumers can save money. She

suggests carpooling and running errands on the way to work or

school.

“Take a look at your driving habits,” she said. “You might save

yourself a few gallons a week by driving smarter, not harder.”

She said the most important way to save money on fuel is to keep

the vehicle well maintained.

“If your car is not being properly maintained, it is not going

to get the miles per gallon you bought it for. You’ll lose 20

percent of that just in improper maintenance,” she said.

She said it is important to keep the tires well inflated, the

fluids clean and fresh, and the engine in working order.

“Keep your cars maintained, conserve a little, travel with a

couple people,” Greer said. “If everybody works a little bit, it

might offset the challenges that are facing the industry right

now.”

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