published Thursday, March 1st, 2012

$4 fuel predicted in April

Catherine Nunley and her 4-year-old son Collin Nunley fill up their tank at the Favorite Market off Main Street early Wednesday afternoon.
Catherine Nunley and her 4-year-old son Collin Nunley fill up their tank at the Favorite Market off Main Street early Wednesday afternoon.
Photo by Dan Henry.

TROUBLE IN THE TANK

$3.57 -- Average price per gallon of regular gas in Chattanooga on

Wednesday.

$3.49 -- Average price per gallon of regular gas in Chattanooga a week ago.

$3.29 -- Average price per gallon of regular gas in Chattanooga a month ago.

$3.27 -- Average price per gallon of regular gas in Chattanooga a year ago.

$3.73 -- Average U.S. price Wednesday for gallon of regular gas.

$4.11 -- All-time average high for regular gas nationwide.


PAIN AT THE PUMP

Gas prices in Chattanooga are up nearly 28 cents per gallon in the past

month and more than 30 cents a gallon from a year ago.

Chattanooga gas prices, on average, are nearly 16 cents per gallon below the national average.

The cheapest gas in the Chattanooga area on Wednesday was at $3.48 per gallon at the Murphy USA station at the Sam's store on Lee Highway.

Sources: AAA Fuel Gauge, Gas Buddy.com

Blame tensions with Iran for gas prices that likely will surge to a national average of $4 per gallon by April and could approach $5 later in the summer, according to the American Automobile Association.

The Islamic republic's latest threats to close the Straits of Hormuz, through which one-fifth of the world's oil supply is shipped, has made commodities traders jumpy, and with good reason, said Jessica Brady, a spokeswoman for AAA.

"When gas goes up, so do groceries, the price of airfares and the price of postage," Brady said. "It really dips into the disposable income that consumers have right now, especially when consumers are trying to recover from the recession."

Though prices at the pump in Chattanooga have never hit $4, the cost of fuel rose 8 cents in the past week to $3.57, marching toward the all-time record of $3.98 set in September 2008. Prices of regular unleaded have jumped 28 cents in the last month alone, or about a penny per day.

As if Iran's saber-rattling isn't enough, commodities traders also are running up prices in anticipation of a debt-deal between Greece and the rest of Europe, which could kick-start demand for gas as the world economy recovers, Brady said.

For workers with long commutes, the hike in gas is an extra expense that couldn't come at a worse time.

"Four dollars a gallon, that's a lot of money," said Terry Foster, who drives from downtown Chattanooga to Ooltewah for his job at Volkswagen.

"That's messed up," he said.

He's thinking about trading his gas-guzzling Oldsmobile for a more fuel-efficient car, he said, but for now he's stuck shelling out more cash just to get to work.

Saleswoman Staci Zink is one step ahead of him. She bought a Toyota Prius during the last run-up in pump prices, and "to be honest, I don't really think about gas prices anymore," she said Tuesday.

But even if more Americans bought fuel-sipping hybrids or electric cars, it would have little effect on prices, AAA analysts say.

Demand for gas has fallen for the past two years with no effect on the unstoppable increase at the pump. In fact, supply and demand -- typically reliable indicators of price -- have nothing to do with the latest hike in fuel costs, according to AAA's Fuel Gauge Report.

"Right now, demand levels are lagging behind last year's numbers and the previous year's numbers," Brady said. "However, I don't think it's going to cause us to see any relief at the pump."

Shuttered refineries

Poll
Have rising gas prices changed your driving habits?
  • Yes. 75%
  • No. 25%

480 total votes.

And it gets worse.

Most U.S. refineries, which transform the earth's thick, black oil into high-octane gasoline, are currently in a state of flux as they convert their winter blend of gasoline into the additive-filled summer blend, which is designed to reduce emissions in warm weather.

And several refineries are in the middle of unplanned shutdowns because of maintenance issues, leaks and accidents, Brady said.

"Some of them shut down indefinitely, some of them shut down unexpectedly, and there was a refinery fire in Washington state [on Feb. 17]," Brady said.

Whatever the cause of rising prices, retiree Tony Ross deals with the increased cost of car ownership in a novel way -- he stays home.

Ross is on a fixed income and can't just pick up an electric car at the dealership, he said.

"I can't afford the [gas] prices they charge now," Ross said. "It cuts into spending money, so you just stay at home as much as you can."

If consumers decide to stay home, the drop in retail expenditures could ripple through the rest of the economy and smother the newborn recovery in its cradle.

"It could mean more people staying closer to home, or traveling but staying with friends and family, and it definitely could have an impact on summer travel," Brady said. "That's why that term 'staycation' was created."

Bill Sasser, a worker at Siskin Steel and Supply, doesn't believe there's a simple fix for the nation's pinch at the pump.

"Everybody just has to deal with it and drive a little less," he said. "I don't know why we can't get an alternative fuel source instead of importing most of our oil from overseas."

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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