Motorists like Tina Cook are feeling the pain at the pump with a state average gasoline cost of $3.65 per gallon. | Alison James
Motorists like Tina Cook are feeling the pain at the pump with a state average gasoline cost of $3.65 per gallon. | Alison James

Archived Story

Gas prices may get worse

Published 12:24pm Friday, February 22, 2013

Gas prices are climbing, and it’s going to get worse before it gets better.

That’s according to Clay Ingram, American Automobile Association spokesperson. AAA monitors fluctuations in fuel prices, and Ingram said the continued rise in prices is “concerning and frustrating.”

“Over the years our gas prices have been tied very directly to our demand,” Ingram said.

Following that model, Ingram said January and February have typically seen lower gas prices because the demand for gas is lower this time of year with fewer people traveling.

“That changed a little bit last year,” Ingram said. “We saw prices start going up in mid-February in anticipation of our spring increase in demand.”

The same thing is happening this year, with the state average cost of gas coming in at $3.65 – that’s up 22 cents from last week when it was $3.43 and a 44-cent increase from last month, $3.21.

“It’s really frustrating to see our prices shooting upward when our demand is not,” Ingram said.

Prices at the pump are a reflection of crude oil prices, which Ingram said should be about $70 this time of year. Instead, investors have driven prices up to more than $90, as high as $114.

Ingram said while other factors may have had some effect on rising prices – like refineries shutting down to switch over to a summer blend or OPEC cutting down on production – they are not impactful enough to be the culprit for a 44-cent increase in a month. Instead, motorists’ failure to price shop may be another key factor in the rise in prices.

“Price shopping could be the biggest factor of all,” Ingram said. “(Price shopping means) keeping an eye on gas prices in your normal day to day travel area and making an effort to buy the cheapest priced gas you can find.”

Ingram said people show a tendency to shop at their favorite gas station regardless of price.

“We’re more concerned with convenience than we are price,” Ingram said. “The result of that is gas prices that are much higher than they could be and should be. It takes competition out of the equation in the marketplace.”

Ingram said that behavior sends a message to gas companies.

“‘Yeah, we don’t like high prices, but we’re just going to buy it wherever it’s convenient, so just charge us whatever you want to charge us for it, and we’re going to keep buying it,’” Ingram said.

And with that kind of mindset, companies have no incentive to try to keep prices low and beat the competition, Ingram said.

“We’re just more concerned about how quick we can get in and out of the parking lot,” Ingram said.

While Ingram said he doesn’t think prices will break $4, it will probably get worse before it gets better.

“It’s going to keep going up the next week or two,” Ingram said.

Last year prices dropped in April and May, which Ingram said is atypical but may happen again this year based on the increases throughout February.

 

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