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Gas prices putting a dent in motorists’ pocketbook

Ouch! If motorists were previously feeling the pinch of high gas prices, they are now feeling an outright slug.

An increase in demand along with refinery shutdowns are being blamed as the cause for record setting gas prices over the past five days.

“Several factors are causing the increase in prices, but the most recent are the refinery outages,” said Mike Right, vice-president of public affairs with AAA. “Fires, explosions and lightning strikes have led to refinery shutdowns in Texas, Pennsylvania, Illinois, Louisiana, Tennessee and California.”

Right said it is not known how long it will take to get the refineries back at 95 percent capacity.

“Depending on how severe the damage is, it could take two days or two weeks,” Right said. “The good news is the imbalance between supply and demand should improve. Hopefully, prices will go back down. We are already starting to see prices erode.”

Whether or not prices will continue a downward trend or will go back up will depend on a number of factors, according to Right.

“They could go either way depending on the future,” Right said. “How severe the hurricane season is along with relations with Saudi Arabia and Venezuela are factors that have direct impacts on fuel prices. The good news is, as refineries get back to 95 percent, supply will increase. Demand is also beginning to decrease due to the summer travel season coming to a close.”

Michael Burdette, a senior analyst with the U.S. Energy Information Administration, said the United States has been seeing refinery problems for the past three weeks.

“Problems are ranging from significant issues to lightning knocking out the power supplies,” Burdette said. “Right now we are in our peak travel season so supply is tight anyway. When you combine the refinery problems with the season, gas prices are going to go up. Wholesale prices of gasoline were $1.70 on the New York Mercantile Exchange on July 26. On Aug. 12 the wholesale price was up to over $2.”

Burdette said the U.S. saw a national increase of 18 cents per gallon last week.

“We did see a slight drop in the price of crude oil on Monday,” Burdette said. “I wouldn’t look for a significant drop in the price of gasoline until after Labor Day. After Labor Day the peak travel season is over and supply should go up.”

While some states are giving motorists a break by lifting the taxes on fuel, Burdette said don’t expect the federal government to do that.

“It’s unlikely that the federal government is going to give any kind of tax relief,” Burdette said. “The energy bill that was signed last week centers around ideas that deal with longer term issues like producing alternative forms of fuel.”

Burdette said out of the 85 million barrels of oil the world consumes each day, the U.S. uses 20 million of them.

“We produce 40 percent of our own oil,” Burdette said. “Our top four importers of oil are Canada, Mexico, Saudi Arabia and Venezuela. We receive an average of 1.7 million barrels from Canada and Mexico each day, 1.4 million from Saudi Arabia and 1.3 million from Venezuela.”

Burdette said while there are untapped areas of crude oil under the Arctic National Wildlife Refuge in Alaska, if the areas were tapped they would most likely produce only 1-2 million barrels of oil per day.

“Congress has not authorized drilling in these areas,” Burdette said. “Some people wanted it in the energy bill, but it was left out. After the 1973-1974 Arab Oil Embargo, the U.S. buried nearly 750 million barrels of oil in salt caverns in Texas and in Louisiana. These are reserves in case U.S. import supplies are interrupted.”

Right said the St. Louis area set record high gas prices throughout the week last week.

“On Monday we were at our all-time high for regular unleaded at $2.55 a gallon,” Right said.

While motorists can’t do anything about the gas prices, Right said they can do something about the consumption of gasoline and help increase the supply.

“Car pooling or mass transit are good options to look at,” Right said. “Utilize the most fuel efficient vehicle in the family fleet. Make sure tires are inflated to the proper level and do not carry around excessive weight in vehicles. Keep vehicles tuned up and make sure air filters are cleaned. Reduce speed when driving.”

According to gaspricewatch.com, on Tuesday the highest gas price for regular unleaded in the U.S. was in Kirkwood, Calif. at $3.49 a gallon. The lowest price was in Joplin, Mo. at $2.03 a gallon. The national average was $2.61 per gallon.

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