Local News

Record Gas Prices Going Up, Up, Up

Posted April 18, 2008

Map Marker  Find News Near Me

— The first hints that cost is making people cut back on gasoline use came Friday as fuel prices in the Triangle finished a week of daily new records on a seemingly relentless march to $3.50 a gallon.

Regionally, prices at the pump jumped 9 cents this work week. By Friday, some stations were posting prices as high as $3.51 for a gallon of regular unleaded gasoline, while the statewide average price sat around $3.42 a gallon.

Diesel prices averaged $4.102 statewide.

High prices might finally be affecting drivers' habits, economists said.

"We have finally in the industry seen a drop in demand, because it has gotten so high that we're starting to see where it's reaching that break point," Gary Harris, with the N.C. Petroleum & Convenience Marketers, said.

Some analysts expect gas prices to peak near $3.80 a gallon. The federal Energy Department, in a recent forecast, said prices could average $4 a gallon nationally at times.

Those highs surpass the $3.18-a-gallon mark to which gasoline prices surged after Hurricane Katrina disrupted supplies in August 2005. A  year ago, Triangle gas prices sat at $2.870 a gallon.

Lindsay Schram said rising prices have made her switch the grade of fuel she uses.

"I have not been putting in premium the past couple weeks. I've been putting in regular because the prices are so high," Schram said.

Soft demand for gasoline might play a role in the price spike as a combination of events along the gas-production pipeline narrow profit margins, analysts say.

Refiners have been cutting back on their production of gasoline, which has a low profit margin. Soft demand for gas has prevented them from boosting pump prices fast enough to keep up with soaring crude futures.

"The refining margins were poor last month and, as a result, we've seen these voluntary ... or discretionary refining run cuts," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill.

Ritterbusch estimated that the average difference between what refiners pay for oil and receive for the gasoline they make from it stands somewhere between $13 and $15 a barrel. But in some areas, this difference has actually gone negative at times in recent weeks, meaning that refiners "were losing money on each barrel of gasoline produced," Ritterbusch said.

Gas prices also rise as refiners switch from producing winter grade gasoline to the more expensive, less polluting version of the fuel they are required to sell during summer. That annual practice draws down supplies as stations try to sell off all their winter fuel.

"I would say that energy prices are having the most profound effect on the economy in recent memory," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago, in a research note.

Transport-dependent businesses around the Triangle have been counting the cost of rising fuel prices.

It takes a lot of money – about $100 a tank – to keep AAA Blue Diamond Limousines' fleet of 23 limos and sedans running, business owner Carrie Peele said. The limos get about 8 miles per gallon.

The business has added an 8 percent gas surcharge, "just like everybody is now adding fuel surcharges to all services," Peele said. All the vehicles now have global-positioning systems to keep drivers on the shortest route.

The surcharge, though, has not kept down business for the limo service, Peele said.

"We're still doing proms; we're still doing weddings," she said.

31 Comments

This story is closed for comments.

Oldest First
View all
  • MyNameIsMud Apr 18, 2008

    "Too bad we can't make a car that runs on poo."

    Well, poo to biofuel has already been done. That is...unless your idea is more simplistic, in which case I don't want to be the engineer tasked with designing and testing the poo-to-vehicle interface.

  • MyNameIsMud Apr 18, 2008

    Global demand for oil will only continue to rise, especially with the rapidly expanding prosperity in both India and China. It will be priced at what the market demands and it could eventually become more profitable (even to the US) to sell domestically produced oil on the open market. Both China and India may be willing to pay more for it than we will one day. In short, we aren't going to drill ourselves out of this problem. The smart politicians (both R and D) will realize that energy independence should become part of a national priority (or national strategy) on par with national security.

  • Ari_Griffin Apr 18, 2008

    Too bad we can't make a car that runs on poo.

  • gnew46 Apr 18, 2008

    Greed and nothing but greed continues to drive these prices up. Katrina is long over with. Now it's everything little thing that comes along. Not even supply and demand works any more. Reduce demand and the oil companies cut back on production to keep the prices inflated. Increase demand and the same thing happens, prices go up. The politicians are so in bed with the oil companies, it is unreal. People raise heck and the weaklings in congress hold hearings but do nothing other than give the people lip service. Roll back the environmental laws, drill Alaska and grant expedited permits for refineries. Some of us have to drive as part of our work and have no choice but to get robbed. The price per gallon is totally ridiculous and there is no oil that is worth $116 a barrel. Hope the crooks, one and all, get to take a nice swim in unused supplies of oil.

  • blondton13 Apr 18, 2008

    "Tears are welling up in my eyes as I pass gas stations with my 70 MPG 250 CC Kawasaki Ninja. I think higher gas prices are healthy in some ways, people think before they drive. ~ johnmkramer"

    Well, unfortunately, it is not healthy for single parent workers like me that commute 50 miles a day to a decent job. This takes money out of my mine and my daughter's mouth as such a huge portion of my payecheck goes to gas alone.
    And no, I can't live closer...I just moved out of Durham to get away from the crime and can't afford anything better.
    Darned if you do, darned....

  • ProudConservative2 Apr 18, 2008

    Oceanchild, you are just silly.

    Time to start drilling in the gulf and ANWAR. The second we even mention that we will start I bet the prices plummet.

  • EasilyAmused Apr 18, 2008

    And my memory did not serve me too well... according to that website, with state and local tax NC pays 45 cents per gallon in tax.

  • EasilyAmused Apr 18, 2008

    For a list of gas tax by state and what it includes ...

    www.gaspricewatch.com/usgastaxes.asp

    Interesting reading. NC is in the top 10 most expensive on this chart.

  • EasilyAmused Apr 18, 2008

    "Why don't we see what amount of the price of a gallon of gas consists of taxes? It would be nice to know. I used to see it on pumps all the time."

    The gas station I go to does. And they show the amount of tax paid in all states around us. It even breaks it down as to federal vs. state tax. Roughly 30 cents per gallon in NC if I remember correctly last time I looked. Also, NC has the highest gas tax of all the surrounding states according to the chart on the gas pump.

  • Viatovao Apr 18, 2008

    The solution

    HHO
    http://www.youtube.com/watch?v=G6YYUOx6fBU

    The problem
    Corrupted politicians will do anything to stop it

    Lets get real folks corporate america greed is the cause why we are where we are, but at the same time it needs to "milk" the system to keep sustaining the market.
    A person is smart its the people that are stupid

More...