News Column

Gas Pump Prices Jump

Feb 6, 2013

Ronnie Thomas

Gas Prices

Only a few weeks ago, as Christmas approached, motorists were in a brighter mood. Gas prices at some stations had dipped to below $3 a gallon, and the ride to grandma's house wasn't so expensive.

Peter Brauchle, a delivery driver for Papa John's in Decatur, rejoiced, too. He envisioned a smoother ride to increased profits.

But early in the new year, gas prices began heating up and reached a boiling point as February approached.

The price at the pump in some areas during the past two weeks soared by 18 cents a gallon, leaving Brauchle, 31, scrubbing dough from his hands and wondering what happened.

"Sometimes I can break even, as much as I spend in gas," he said. "I worked 10 hours last Friday and came home with about $90 profit. If I can bring home $40 and spend anywhere from $15 to $20, I've got to take some of that money out to pay for gas the next day. I may not get another $90 day for another month. I'm trying to keep my head above water and not sink."

Clay Ingram, a spokesman for AAA-Alabama, understands Brauchle's pain.

"Over the years, we have historically seen gas prices bottom out during January and February, which have been our lowest price months of the year," Ingram said. "They ramp up through the spring and peak Memorial Day. But the past couple of years, the spring ramp-up has started a little earlier."

Ingram cited several reasons for the hike. They range from steps the refineries are taking to meet a requirement by the Environmental Protection Agency to switch to a cleaner burning gasoline for the summer to the purchasing of crude oil futures by investors.

"Because the demand now is low, a lot of refineries are also taking the opportunity to temporarily shut down and do routine maintenance," Ingram said.

"And they start their summer blend gas production to get it in the pipeline, literally and figuratively, so we can all be burning it by mid to late March. That in itself bumps the price up, usually a nickle a gallon."

Ingram said the permanent closure of a refinery in Port Reading, N.J., at the end of the month is another factor in the increased prices.

"That refinery accounts for 7.5 percent of the Northeastern U.S. gas production," Ingram said.

"This places increased demand on refineries from other areas and puts upward pressure on gas prices as well, causing a ripple effect across the country."

Heating prices also rise this time of the year in the Northeast, Ingram said, and "heating oil up there is also made from crude oil, just like gasoline."

But Ingram said it still doesn't make sense that in February people are already talking about $100 a barrel crude.

"That shouldn't be," he said. "Our demand doesn't warrant that. A lot of investment people are keeping gas prices artificially inflated, in my opinion. ... They go out and buy crude oil futures and are unwittingly pushing crude oil prices higher."

Most area gas distributors either did not return calls for comment or would not offer an opinion as to the spike.

"I have no idea what the cause is," said Alan Campbell of Campbell and Sons Oil Co. in Huntsville. "I know the cost of gas on the Gulf Coast is lower than in New York. Probably some of the reason we've been getting increases is to catch up with New York. That's the only thing I know that makes any sense.

"As for the world market, I have no idea," Campbell said. "It could be tension in the Middle East."

Whatever the reasons might be, Ingram said, motorists have two ways to bring gas prices down: fuel conservation and price shopping.

"Over the last year or two, we did a terrific job with fuel conservation," he said. "But despite our demand for 2012 being at a 10-year low, the national average for a gallon of unleaded regular gasoline was $3.60, and in Alabama gas averaged $3.48. That means we're not doing a good job price shopping."

Ernest Ratliff, 52, of Decatur, who retired on disability, doesn't drive for a living like Brauchle. But he likes to frequent his favorite fishing holes.

"When you live on a fixed income, you're limited," he said. "You have to conserve your fuel in order to buy the gas. I just can't jump up and go fishing like I used to, to Guntersville, Scottsboro and all the dams. I have to fish locally, at Swan Creek and Spring Creek."

Ratliff said he once filled his pickup with gas for $20. Now, he said, it's $100.

"They always have a reason to increase prices and we consumers have to deal with it," Ratliff said. "They predict storms and conflicts to happen, but sometimes, whether they happen or not, prices still go up."

Ratliff said he follows Ingram's advice and tries to purchase the more reasonably priced gas.

"I can't buy the brands anymore," he said. "I have to go to the smaller gas companies that are cheaper."


Distributed by MCT Information Services

Source: (c) 2013 The Decatur Daily (Decatur, Ala.)

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