Page 16 ■ Thursday, February 23, 2012


NATION & WORLD Gas prices are highest ever for this time of year


CHRIS KAHN AP Energy Writer


have never been higher this time of the year. At $3.53 a gallon, prices are already up


NEW YORK (AP) — Gasoline prices


25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April. “You’re going to see a lot more stay- cations this year,” says Michael Lynch, president of Strategic Energy & Economic Research. “When the price gets anywhere near $4, you really see people react.” Already, W. Howard Coudle, a retired


machinist from Crestwood, Mo., has seen his monthly gasoline bill rise to $80 from about $60 in December. The closest ser- vice station is selling regular for $3.39 per gallon, the highest he’s ever seen. “I guess we’re going to have to drive


less, consolidate all our errands into one trip,” Coudle says. “It’s just oppressive.” The surge in gas prices follows an in- crease in the price of oil.


“Our goals should be to get gasoline to $2.50 or less so that working families can actually get to work and retired families can travel.”


– Republican presidential candidate, Newt Gingrich


ently. Brent crude from the North Sea is a proxy for the foreign oil that’s imported by U.S. refi neries and turned into gaso- line and other fuels. Its price has risen 11 percent so far this year, to around $119


Oil around the world is priced differ-


a barrel, because of tensions with Iran, a cold snap in Europe and rising demand from developing nations. West Texas In- termediate, used to price oil produced in the U.S., is up 4 percent to around $103 a barrel. That’s 19 percent higher than a year earlier. Higher gas prices could hurt consumer spending and curtail the recent improve- ment in the U.S. economy. A 25-cent jump in gasoline prices,


if sustained over a year, would cost the economy about $35 billion. That’s only 0.2 percent of the total U.S. economy, but economists say it’s a meaningful amount, especially at a time when growth is only so-so. The economy grew 2.8 percent in the fourth quarter, a rate considered mod- est following a recession. Gas prices are already an issue in the


presidential campaign. Republican can- didate Newt Gingrich spoke several times last week about opening up more federal land to oil and gas drilling as a path to- ward U.S. energy independence — and lower pump prices. “Our goals should be to get gasoline to $2.50 or less so that working families can actually get to work and retired families can travel,” Gingrich said at a campaign event in Los Angeles Feb. 16. High oil and gas prices now set the stage for even sharper increases at the pump because gas typically rises in March and April. Every spring, refi ners suspend opera-


tions to switch the type of gasoline they make. Supplies of wintertime gas are sold off before March, when refi neries need to start making a new formula of gasoline that’s required in the summer. That can mean less supply for service


Associated Press A customer fi lls up at an Irving Oil gas station, in Berlin, Vt., on Feb. 16.


more oil, a costlier component, is needed to produce each gallon. The Oil Price Information Service pre- dicts that gasoline could peak at $4.25 a gallon by the end of April. That would top the record of $4.11 in July 2008. The national average for gasoline be-


says. Paul Dales, a senior economist at Capi-


stations, resulting in higher gas prices. And summertime gasoline is more expensive to make. The government mandates that it contain less butane and other cheap or- ganic compounds because they contribute to the formation of ground-level ozone, a primary constituent in smog. That means


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gan the year at $3.28 a gallon. The average price for February so far is $3.49 a gallon. That’s up from $3.17 a gallon last Febru- ary, a record at the time. Back in 2007, before the recession hit, the average for February was $2.25 a gallon. Prices are higher on the East and West


Coasts, where gasoline has risen above $3.70 in Connecticut, New York, Wash- ington D.C. and California. This isn’t un- usual — states on the coasts charge some of the nation’s highest gas taxes. High gas prices put a strain on many


“I already drive as little as possible,” he


tal Economics says it would take a bigger shift in the global economy — say, a deep recession in Europe or a slowdown in Asia’s manufacturing — for pump prices to drop noticeably. Either event would slow oil demand, depressing prices. But experts expect demand to keep


rising. World oil demand is expected to increase by another 1.5 percent to 89.25 million barrels a day in 2012, according to the Energy Information Administration. In the short term, tensions with Iran


are feeding fears that oil supplies could be blocked. The U.S. and Europe are tightening


people’s budgets. Americans spent 8.4 percent of their household income on gasoline last year when gas averaged an all-time high of $3.51 a gallon. That’s double the percent- age a decade ago. They could pay even more this year, even though demand is the lowest in 11 years as people drive few- er miles in more effi cient cars, says Tom Kloza, chief oil analyst at OPIS. Gary Goodman commutes into Man-


economic sanctions against Iran over what the West believes is Iran’s attempt to build a nuclear bomb. World leaders fear Israel may be planning a strike against Iran, the world’s third largest oil exporter. In response, Iran has threatened to


withhold its own oil deliveries and to block the Strait of Hormuz, a waterway along its coastline through which one- fi fth of the world’s oil fl ows. On Feb. 17, an international banking


hattan from Edgewater, N.J., because gas, tolls and parking make the cost of driving prohibitive. Goodman, an accountant, commutes


by bus. He uses his car mostly for trips to the grocery store or for occasional nights out. He says he has no choice but to eat the higher gas costs.


clearinghouse crucial to Iran’s oil sales said it is prepared to discontinue services to Iranian fi nancial institutions being tar- geted by the EU and U.S. sanctions. That could ratchet up the pressure on Iran, but also send oil prices soaring. The price of Brent crude fell 53 cents


on Feb. 17 to $119.58. WTI gained 93 cents to $103.24.


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