Gas around $3 a gallon causing ‘great concern’
Lehigh Valley has seen spike of 44 cents since December
Nobody, it seems, took much notice when gasoline prices dipped during the early months of the coronavirus lockdown, as people holed up in their homes and kept their vehicles parked in their driveways, sometimes for weeks.
But as state officials continue to loosen virus restrictions, people are back in their cars and so are the heftier prices for a gallon of gas.
Gas prices in the Lehigh Valley have risen since the end of November by at least 1% per week, local economist Kamran Afshar said. More recently, spikes have been as high as 5.3% in one week.
Since Dec. 1, the price of a gallon of regular gas in the
Lehigh Valley has climbed 44 cents, from $2.52 a gallon to $2.96 a gallon, with some at $3, data from AAA shows. Pennsylvania’s average price was $3.01 on Friday, AAA said, with Lehigh County at $2.97 and Northampton County at $2.95. GasBuddy had the state average at $3.03.
“It’s rising at an increasing rate that is a great concern,” said Afshar, who compiles a consumer price index as director of the data analytics center at DeSales University. Afshar’s 2020 index, which he released last month, showed the cost of gas down 3.9% in the Lehigh Valley, while rising 1.4% during 2019. Nationally, gasoline prices dipped by 10.2% in 2020, he said.
But prices have been on the rise as the pandemic’s grip has started to soften. More than half the 0.4% overall increase in February consumer prices nationwide came from a second monthly surge in gas prices, which rose 6.4% after a 7.4% jump in January, Associated Press reported. So what’s fueling the rapid increase? A jump in the cost crude oil is one factor. But producers, who tamped down production at the onset of the coronavirus pandemic, haven’t been as quick to ramp things up, according to Patrick De Haan of GasBuddy, which tracks gas prices and provides analysis on the petroleum industry.
Add motorists resuming driving to work, school and elsewhere in the U.S. and overseas under relaxed coronavirus restrictions, and prices have skyrocketed, he said.
“By and large we’re here because demand is up,” said De Haan, who is head of petroleum analysis at GasBuddy. “Demand is up significantly.”
But De Haan acknowledged this increase has been swifter than normal.
“I don’t think anyone would have seen this outcome,” he said. “If they did, oil companies might have played it differently.”
Afshar said fluctuating gas prices aren’t unusual, but the rate of increase is.
“Where it is unusual is the unbelievable climb that has just started,” Afshar said.
Motorists take note
Some people interviewed at the Turkey Hill Minit Market off the Hellertown-Bethlehem exit of Interstate 78 have noticed the rapid increase, even if they didn’t seem numbed by it.
“You’ve got to put gas in your car; it doesn’t matter,” said Michael Sylvester, after he finished pumping $80 worth of fuel into his Chevrolet Suburban SUV.
While Sylvester, of Bethlehem, and Rick Puskas, of Hellertown, gassed up their vehicles at a dispensing island, they listed their theories for why prices have risen: a new president, Joe Biden; his moves thus far in the Middle East, and his executive order to cancel construction of the Keystone XL pipeline running from Canada to the Gulf Coast.
De Haan said those reasons have not contributed to the hike, but other factors have come into play, including domestic gas-production cuts, OPEC’s decision not to increase production, and February’s severe storm and freeze in Texas, which hampered refineries.
Motorists Luis Perez and Mitzy Matos, both of Allentown, said if gas rises above $3 a gallon, it will put a dent in their household budgets.
“It’s too much; it’s too high,” said a smiling Matos as she filled up her Toyota RAV4.
De Haan noted $3-a-gallon gas is not rare in Pennsylvania and has occurred several times during the last several years after a state-imposed increase sent the overall tax to 77.1 cents a gallon, second behind California’s 81.5 cents a gallon. Pennsylvania’s state portion of the tax is 58.7 cents, he said.
“Very short term, you could flirt with $2.99 here for the next couple weeks. But unless something drastically changes with the oil production, I think you’ll be at $3 most of the summer and potentially longer than that,” De Haan said.
Afshar said prices might subside by next week, based on crude prices that have been falling slightly.
“I don’t think the prices will go up much higher,” he said. “But if the supply chain is hampered [such as how quickly [inlinenote]and effectively Texas refineries resume production after February’s disastrous weather] it is one of the questions in the equation.”
The highest average gas price in Pennsylvania reported by AAA was $4.07 on July 16, 2008. Spokesperson Jim Garrity also noted on May 4, the region saw a low price of $1.92 per gallon.