The days of cheap gas in metro Atlanta appear to over, at least for now.
Average gas prices will crack the $3-a-gallon mark in a few months for the first time since mid-2014, according to an industry forecast.
After a dramatic drop this past fall that took the price below $2 a gallon at a number of area stations, a combination of supply cuts and rising demand will shove that retail cost much higher in coming months, according to Gas Buddy.
“The party at the pump will likely wrap up in the next month or two,” said Patrick DeHaan, head of the company’s petroleum analysis.
Six metro areas are likely to see even higher prices, including San Francisco, which could crest at about $4.20 a gallon, according to the Gas Buddy projection.
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The forecast is pegged to current circumstances. Let there be a sudden recession, a rupture of a pipeline coming from American refineries along the Gulf coast, a major hurricane or a major war in the Middle East and all bets are off.
“Should all the darkest realities come to fruition, it could lead to slow down in the economy and take gas prices right along with it,” DeHaan said. “As goes the economy, as go gas prices in the year ahead.”
AAA too, expects prices to start rising soon.
This year is going to be “bookended,” with the lowest gas prices in the first five weeks and last five weeks of the year, while the middle 10 months will see higher prices, said Garrett Townsend, spokesman for AAA in Georgia. “Traditionally, gas prices rise during the spring driving season, often peaking around Memorial Day.”
The impact of higher prices on the economy may not be a problem. Georgia’s growth has been steady enough so a modest price increase would not likely be a significant threat.
Given the market’s current trajectory, Atlanta will peak out between $2.80 and $3.10, he said.
On Thursday morning, the lowest reported price for regular in metro Atlanta is $1.79, a price offered to members at several Costco and Sam’s Club stores, according to Gas Buddy. Among non-member retail outlets, the lowest price available was $1.84 at a Chevron in Lawrenceville, although it accepted cash purchases only.
The highest area price was also at Chevron – actually, two of them. Charging $2.89 a gallon were a Chevron in Atlanta and another in Smyrna.
But prices are relative.
Atlanta’s average gas prices hit an all-time high of $4.10 a gallon in the summer of 2008 – a spike that helped intensify what had been a mild recession. As the economy tanked, gas prices plunged to a low of $1.46 just a few months later.
With the recovery of the economy, prices rebounded in 2010 and Atlanta drivers got used to paying $3 a gallon or more – a level that lasted nearly five years. But then, the surge of American production in the Midwest began to change the global market, undercutting prices, and pump prices in Atlanta followed suit.
Thanks to the ability to draw millions of barrels of oil from shale, the United States is again the world’s largest oil producer – a ranking that had been lost five decades ago.
Saudi Arabia has apparently added to supply in recent months at least partly in hopes of softening the bad public relations surrounding the murder of journalist Jamal Khashoggi, said economist Tom Smith of Emory’s Goizueta School.
By pumping more, they save Americans some money, although it is a modest bonus for household finances, he said.
The average metro Atlanta household travels about 21,000 miles a year and uses more than 80 gallons of gas each month, Smith said. “So if the gas prices stay at 10 cents a gallon lower this is a savings of $8 per month, roughly. Not enough to make much of a difference for most people but every little bit helps.”
Only now, the global equation is shifting again.
While no longer as dominant as in years past, Saudi Arabia and the Organization of Petroleum Exporting Counties can move world prices. And – with support of Russia – they have said they plan to cut production to raise prices.
Nationally, economists estimate that each 10 cent a gallon increase in gas prices will take roughly $14 billion out of consumer wallets.
But because America is now both a huge producer and a nation of consumers, the impact of rising prices is mixed. In states like North Dakota and Texas, higher prices boost jobs. In states like Georgia, the impact is mostly negative.