PUMPING UP GAS PRICES
Cost of fuel has increased more than 40 cents from a year ago
Get ready for a little more pain at the pump this summer. Crude oil prices are at the highest level in more than three years and are expected to keep climbing, pushing up gasoline prices along the way.
Chattanooga motorists are paying the highest gas prices since hurricanes Irma and Maria shut down pipelines and spiked prices in the Southeast last September. Local gas prices are up by more than 40 cents a gallon from a year ago, according to the weekly survey of 170 Chattanooga area gas stations released Monday.
“This will be the most expensive driving season since 2014,” said Tom Kloza, global head of energy analysis for Oil Price Information Service. “We’re seeing a higher price environment … but I don’t think we’re going to look at really apocalyptic numbers.”
Surveys by AAA and Gasbuddy.com show the average price of regular gas in Chattanooga at $2.49 per gallon is still 32 cents per gallon less than the U.S. as a whole and the cheapest of any major metro city in Tennessee.
Although local gas prices are up by more than a dollar a gallon from the low point reached two years ago, they remain $1.36 below the peak price of $3.85 a gallon reached a decade ago before the Great Recession caused a plunge in oil demand and prices, according to Gas buddy.com
Mark Jenkins, spokesman for AAA — The Auto Club Group, said crude oil prices are about 33 percent more expensive than they were this time last year.
“Expensive oil means expensive gasoline,” he said. “The higher prices at the pump are mainly a result of a tightening oil market, which leaves us prone to price hikes based on geopolitical tensions and supply shortage concerns.”
The price of U.S. crude oil has been on a steady incline since last June, last week hitting $68.64, the highest since December 2014. Benchmark U.S. crude closed Monday at $68.57.
Oil prices near $70 shouldn’t put the brakes on economic growth, however. While they’re boosting costs for some sectors of the economy, the energy sector and related industries have more money to spend on equipment and workers.
But higher oil prices are certainly an inconvenience for drivers, especially those with lower incomes.
“The good news is, both at the global level and the U.S. level, this is occurring at a time when growth is fairly robust,” said Nariman Behravesh, chief economist at IHS Markit. “But consumers as a whole will be hurt, mostly because gasoline prices are going up.”
Pump prices normally rise as demand increases from families going on vacation and taking to the highways on road trips. Already, U.S. consumer demand for gasoline hit a record high for April, according to the EIA.
Chattanooga’s $1.1 billion-a-year tourism industry, which is busiest in the summer months, generates most of its business from those who drive to the Scenic City. Although higher gas prices will increase the cost of travel, industry leaders said they don’t anticipate the rise in fuel prices in the past year will negatively impact most hotels and attractions, which derive 75 percent of their traffic from markets within a 2- to 3-hour drive.
“People aren’t likely to change their vacation or weekend plans because of an extra $5 cost of gas,” said Dave Santucci, marketing vice president for the Chattanooga Area Convention and Visitors Bureau.
Patrick DeHaan, head of petroleum analysis for GasBuddy, said he doesn’t foresee significantly higher gas prices from their current level.
“Gas prices are perhaps just a dime away from hitting a peak for the short-term, pending OPEC’s meeting in June,” DeHaan said. “With refineries well positioned for the summer months, we look for some relief by mid-June, but do expect this summer to remain one of the priciest in the last few as average prices climb close to the psychological $3 per gallon barrier.”
AAA surveys show 16 percent of all U.S. gas stations are now charging more than $3 per gallon.
Staff writer Dave Flessner contributed to this story.