Gas prices up, but cost of power remains stable
Gasoline prices in Chattanooga are up nearly a third from a year ago, but the cost of power to heat or cool your home has remained largely unchanged.
Despite a 2-cents-per-gallon drop in average gas prices last week, prices for regular gas at the pump in Chattanooga are still 64 cents a gallon higher than a year ago and are 73 cents above what they were at this time two years ago, GasBuddy’s daily survey of 170 stations in Chattanooga showed Monday.
In contrast to higher prices at the pump, however, electricity prices in Chattanooga are virtually unchanged as cheaper fuel cost adjustments are offsetting the nearly 2 percent base rate increase adopted by the Tennessee Valley Authority last fall.
TVA said Monday that heavy rains and cheaper natural gas are keeping fuel costs for America’s biggest government utility lower than is typical for the hot summer months.
“The overall system average fuel rate for August is approximately 11 percent lower than the three-year average August fuel cost,” TVA spokesman Scott Brooks said. “This is primarily due to expectations for higher hydro production and lower gas rates in August.”
Abundant rainfall is generating more of TVA’s cheapest source of power — hydroelectricity produced by the 28 power-generating dams on the Tennessee River
and its tributaries — and natural gas and nuclear fuel prices are not increasing, Brooks said.
For the typical Chattanooga household that uses 1,295 kilowatthours of electricity a month, EPB will charge $140.31 for electricity next month, or only a penny more than the current charge for a similar amount of power.
A year ago, EPB charged $139.30, or about 0.4 percent less, for the typical household. Fuel costs are cheaper than a year ago, but TVA boosted its wholesale rates last fall to help pay down its debt and other fixed expenses.
TVA directors are scheduled next month to vote on a similar 1.5-2.0 percent increase in wholesale rates for the fiscal year that begins Oct. 1.
Despite such increases, TVA said the average cost of its power, including discounted industrial rates, is still below what it was in 2013.
While power costs have remained in check, gasoline prices have risen over the past couple of years as driving demand has increased and oil supplies have tightened.
The summer outlook for prices remains mixed despite President Donald Trump’s appeal to OPEC nations to cut prices and talk about tapping into U.S. oil reserves to lower prices at the pump.
“President Trump has talked about tapping into the nation’s Strategic Petroleum Reserve to put downward pressure on oil prices, but this would be a grave mistake and only lead to minuscule drops at the pump and only temporarily,” said Patrick DeHaan, head of petroleum analysis for GasBuddy.
“Last week’s plummet in oil prices came thanks to Libya signaling it would resume oil exports. If there’s anything to learn here it’s that President Trump has little power over global supply and demand, and if anything, there’s few options for the president to bring real change to gas pumps: slow motorists’ appetite for fuels, see sustainable increases in production or slow down the abrasive and inflammatory rhetoric that spooks the oil market.”
Pump prices rose last week in many markets after reports surfaced of seven gulf coast refineries dealing with various operational issues, although most of those problems have since been corrected, according to AAA.
“Fortunately, fuel prices plunged on the stock market last week, which created adverse pressure to the rising prices caused by refinery issues,” said Mark Jenkins, spokesman, AAA - The Auto Club Group. “This sort of volatility at the pump is common during the summer driving season. The three most common reasons for increases during the summer are refinery outages, geopolitical tension, and hurricanes.”
Although up from a year ago, the average price of regular gas in Chattanooga of $2.55 per gallon Monday is still 32 cents per gallon below the U.S. average of $2.87 per gallon, GasBuddy said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.