Gas Prices Have Many Saying 'Ouch'

Up, up and away go gas prices. With gas prices rising seemingly every day, what can be done to relieve the pain at the pump? What and who are causing gas prices to go up, and what effects are high gas prices having on country’s economic recovery?

It is safe to say that of the country’s 114,000 gas stations, every one of them has raised their gas prices. Since the beginning of the year, gas prices across the country, on average, have risen by 10 percent. Prices have not climbed this quickly since hurricane Katrina shut down one-third of the country’s refineries.  

Locally, AAA reported the average cost of regular unleaded gas was $3.44 at the end of the week. That put Georgia’s average price below the national average of $3.52. Prices in the metro Atlanta area have increased by 39 cents in the last three weeks. 

“These gas price increases are attributed to two things. One is an increase in global demands due to rapid economic recoveries by other countries, especially Asia and even in the U.S. The second reason for increases is political instability in oil producing countries, with oil companies trying to lock in prices,” said Kenneth Heaghney, economist, Fiscal Research Center, Georgia State University.

Gas price increases are felt by all. “Increases in gas prices act as an additional tax. Forcing people, especially the poor, to spend more on energy and fuel, while cutting back on food and health,” said Heaghney.

It is being predicted that regular gas prices could be $4 a gallon by Memorial Day. The last time prices rose that much was June 2008.

“If prices reach $4 I will no longer want to hear about the pain, I want to be shown the baby,” said Spencer Freeman as he filled up at the QT station on Highway 78. Freeman, an attorney who travels to and from magistrate and state courts throughout Georgia, said that while he is reimbursed 40 cents a mile, that will not be enough if prices continue to rise.

“I did the economics, on average I drive at least 200 miles a day. So if prices go beyond $4 a gallon I would have to be reimbursed accordingly to make it equitable. I would love to be able to take public transportation, but Georgia is a bad state for public transportation,” said Freeman.

Businesses are also feeling the pain.  Each one-cent increase in gas prices equals a loss, in national consumer spending of $1.2 billion per year. That means a 34-cent increase in gas prices cost the economy $41 billion in consumer spending.

“Due to higher gas prices we had to add a 20-cent increase in per-mile surcharge. This is our first increase in two or three years,” said Darrell Freedman, dispatcher at Gwinnett Taxi.

“What has surprised me is that these increases have not been gradual. They are going up every day,” said Freedman, a 12- year Gwinnett Taxi employee. “Oil speculators come up with all types of reasons to up the per barrel price.”

A Daisy A Day Florist owner Julie Eschbach said that so far higher gas prices have not impacted daily operations. Eschbach and her employees are, however, being far more conscientious about delivery areas in efforts to avoid return trips.

“So far I do not plan to raise delivery charges to compensate for higher gas prices. We will take the loss associated with fluctuating prices to retain our customers. As an optimist I am anticipating prices going down in mid-to-late fall; [we] should see prices going down by November when they change to winter gas grades,” said Eschbach.  

Fears that current high gas prices will bring the economy recovery to a halt have some U.S. senators lobbying President Obama to release some of the country’s strategic petroleum reserves.  They believe releasing some of the reserve will help to offset high gas prices.  Currently the U.S. has 727 million barrels of oil on reserve. The U.S. has the largest reserve on the planet.   

During a recent interview on Meet the Press, William Daley, White House Chief of Staff said, “The issue of the reserves is one (option) we are considering. It is something that has only been done in very rare occasions. There are a bunch of factors that have to be looked at, it is just not the prices…All matters have to be on the table when you see the difficulties coming out of this economic crisis we’re in and the fragility of it.”

On Tuesday, March 8, oil futures had declines and OPEC officers announced a ramping up of oil production. This will be done to make up for the diminished supply of oil due to unrest in Libya.

“Maybe it is time for us to drill in the Gulf and get more transparency in the oil speculation process,” said Freeman.

“Oil speculators are trading financial assets and don’t typically have physical operations. They trade and speculate on futures markets. This includes oil pricing changes,” said Heaghney. “While speculation can have short-term effects, they do not have long-term impact. Gas prices will continue to rise depending on the situation in Libya and wider political unrest in larger oil producing countries in the Middle East.”

The only certainties, it seems, are that gas prices will continue to go up and drivers will continue to feel these increases in their purses and wallets.