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Gas prices could peak again
Aug 28, 2006 12:00 am
While crude oil prices have already shot up in reaction to a major oil field shutdown in Alaska, local analysts say it's too soon to tell if a major impact will be felt in Middle Tennessee.
While prices are still higher than pre-Hurricane Katrina numbers this time last year, Nashville AAA District Manager Jim Lott said the impact has yet to be felt here from the shutdown.
"We're faring pretty good, and we haven't seen, so far, any significant upturn because of the problems in Alaska," Lott said Tuesday. "Immediately we're all kind of fearing that, but we haven't seen that come into play yet."
AAA monitors gas prices from 10,000 stations nationwide by pulling daily credit card receipts.
Recent increases can be largely attributed to problems in foreign, oil-rich companies, explained Mary Lee Booth, executive director of the Tennessee Oil Marketers Association. This group is a trade organization for Tennessee's gas retailers.
"Retailers have no control over price – maybe the last five percent, but that's about it," Booth said. "Some of the foreign countries where we import oil are having problems, like Nigeria, Iran and Venezuela. … That's part of the problem which has caused the barrel price to shoot up and stay up."
Booth noted the per barrel price of crude oil has shot up dramatically just in the past few days from $69 last week to $76.34 with further rises expected. Furthermore, she said for every dollar oil goes up, gas goes up 2.6 cents.
Dr. Paul Stumb, dean of the Labry School of Business and Economics at Cumberland University, said economists are projecting prices as high as $4 a gallon in the not-so-distant future.
However, Stumb noted American consumption habits have not significantly changed since oil prices began skyrocketing, and Americans still have it relatively easy compared to most other nations.
"If you travel to Europe and the Far East, gas prices are already 50- to 75-percent higher than they are in the U.S. today," Stumb said.
He said any jump as a result of the pipeline incident in Alaska will likely be temporary.
"The Katrina reaction was, I think, more of an emotional reaction," Stumb said. "… The refinery capacity was not affected as much as we thought. We had excess refinery capacity at the time."
According to AAA, Monday's average fuel price was $2.90.
The average U.S. retail price of a gallon of unleaded, regular gasoline was $3.036 on Wednesday. While it has changed little from the beginning of the week it is still near its all-time high of $3.057, reached Sept. 5 after Hurricane Katrina hit the Gulf Coast. Gasoline futures also rose, indicating the market expects further increases.
BP said it will have to replace most of the 22 miles of so-called transit pipeline at Prudhoe Bay – the nation's largest oil field – which produces about 2.6 percent of the nation's daily supply including imports.
Most of the crude oil produced out of Alaska's North Slope each day goes to refineries in Washington, California and Hawaii, said Joe Sparano, president of the Western States Petroleum Association, a trade group based in Sacramento, Calif.
Bob Malone, chairman of BP America, said in a worst-case scenario, it could take weeks or months to replace the pipelines. But the company said it will try to put portions of the network back into operation as they are repaired.
Associated Press reports contributed to this story.
Staff Writer Jason Cox can be reached at 444-3952 ext. 45 or by e-mail at firstname.lastname@example.org.