Mar 102005
Authors: Jake Blumberg

Gas prices across the United States are on the rise, leading people across the nation to pump out more cash for less gas at service stations.

Average gas prices across the United States have risen from $1.73 in 2004 to $1.99, an increase of 26.1 cents in the past year, according to the Energy Information Administration Web site.

In the Rocky Mountain region, the average gas price is $1.98, and in California, the average price is $2.22, the highest in the nation.

Not only have prices risen in the past year but average prices have also sharply increased just within the past week, increasing 7.1 cents in the Rocky Mountain region and 9.1 cents in the Midwest region, with the national averaging growing by 7.1 cents.

With Spring Break just around the corner for the nation's colleges, including CSU's starting next week, some students are factoring the rising gas prices into their plans.

Meaghan Mercer, freshman biology major, is planning to go on a road trip for Spring Break.

'The cost of gasoline is one of the big budgeting issues we have had to work with for our trip,' Mercer said. 'If the prices rise, it may mean we have to cut costs in other areas, which can become a huge issue.'

Sarah Mezone, owner of Goff Creek Lodge, located outside of Yellowstone National Park in Cody, Wyo., thinks the climb in gas prices will handicap the tourism industry, which is already struggling for life.

'Tourism numbers have not really recovered since 9/11 (September 11th, 2001),'�� Mezone said. 'We have been struggling for years now, and each year that the gas prices rise, it gets harder and harder to succeed. In our case, all of our customers drive to our lodge, and thus, the gas prices really affect our business.'

The pressure the new prices may have on the tourism industry is just one of the far-reaching effects of gas-price increases. The economy as a whole will feel the effects of the difference in gas prices, said Ronnie Phillips, chair of the economics department.

'People will be faced with a choice between two options. They can either drive less, or drive the same amount and pay more,' Phillips said. 'If they drive less, that will affect the mass-transportation industry, because more people will probably be using it. If they continue to pay for gas at higher prices, they will have to cut costs somewhere else. The question is what nonessential items to cut back.'

Phillips said that although gas prices do have an effect on the economy, higher prices will not directly lead to a recession or depression.

'You can't say that high prices will cause a recession,' Phillips said. 'It will have distributive effects on the economy and individuals, but we are in a market economy, and market economies adjust.'

One reason for the recent increase in gas prices can be traced to the main ingredient of the gasoline itself: crude oil. Crude oil is sold by the barrel to gasoline manufacturers, and each gallon of gasoline that is made requires one equal gallon of crude oil, said Bill Bush, spokesperson for the American Petroleum Institute (API), a group that represents some oil and gasoline manufacturers in the United States.

'Crude-oil prices and gas prices are closely related,' Bush said.

'Recently, the crude oil prices have jumped to $55 a barrel, so it's not really a surprise that the gas prices have increased, too. Right now, gas manufacturers are paying about a $1.25 for one gallon of crude oil, but they still have all their operating costs to deal with, so the price of their end product has to go up with the added amount they are spending on the oil.'

Along with crude oil, there are other factors that can influence gas prices, including individual perceptions of the future and simple economics.

'If people are nervous about the supply of oil and gas going down, the price will go up,' Bush said. 'It is just a function of the basic idea of supply and demand. People's perception of the future can play a large role in gas prices.'

Although gas prices are on the rise, Bush said the future is uncertain and that forecasting higher gas prices is risky.

'We (API) do not forecast prices,' Bush said. 'It is incredibly hard to know what is going to happen in the future and forecasting is a very tough thing to do.'

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