It’s that time: Memorial Day is in sight, temperatures are rising, vacations are approaching. And gas prices are rising.
It happens pretty much every year. But so far this spring, metro Atlanta drivers seem to be shrugging off the higher prices at the pump — partly because they’ve seen much worse.
“We take the same vacation to northern Michigan every year,” said Brian Anderson, 55, of Alpharetta, pumping gas into the company car. “That’s a thousand miles each direction. We’re going this year.”
The average price in metro Atlanta on Thursday was $2.62. That’s up 32 cents in the past month and more than 60 cents since January, but still way below the $3.68 average of one year ago, according to GasBuddy.com.
Anderson said when prices peaked last year, “I hounded the kids to consolidate their trips,” he said. But the recent increase? “It really hasn’t changed our behavior.”
While prices are expected to keep edging up, they are not expected to hit $3 a gallon any time soon, said Gregg Laskoski, senior petroleum analyst at GasBuddy.
“I think we may see the prices increase another 10 or 15 cents a gallon at most.”
Gasoline’s ebb to $1.99 a gallon earlier this year was the lowest price Atlanta drivers had seen since early 2009, according to GasBuddy.
A surge in supply, shifts in international oil markets and a trend toward more efficient vehicles, which tamps down demand, contributed to the fall off last year’s peaks.
Now, the rise of the past few months is being spurred by a combination of factors, including financial speculation in oil prices, Laskoski said. Speculators bet on higher prices, which has the effect of pushing them upward.
“There is still a lot of sentiment in the financial markets believing we are dealing with a bullish run,” Laskoski said.
Additionally, supply has dropped, partly because several Gulf Coast refineries went gone off-line after “mechanical problems,” according to energy firm Platts.
Global shifts
More than anything, the price of gasoline depends on the global price of oil, which is moved by political events and the shifting balance of supply and demand for petroleum. Oil supplies have dipped in recent weeks, according to Platts.
The current price hikes are also part of a larger boom-and-bust cycle. When the price spiked last year, it spurred a frenzy of drilling throughout North America, including the American Midwest.
But lower prices since then have made some operations unprofitable, and the number of new drilling rigs has been declining, according to James Williams, president of Arkansas-based WTRG Economics. Oil production in the lower 48 states will decline in June, he predicted.
Perhaps more critically, a number of oil-producing countries are threatened by lower prices, said Sharon Burke, former Defense Department official and now senior advisor at the New America Foundation.
“Nigeria needs prices above $100 a barrel and at (the current price of) $60 a barrel, they are not able to pay all their bills,” she said. “Venezuela too is at high risk.”
The market is simply not stable, she said. “You could have an oil shock. That’s why making oil price predictions requires a suspension of disbelief and a lot of humility.”
No spending spree
Low gas prices this past year have not produced the consumer spending spree many economists expected. But the opposite has been true in the past, said Joe Scripture of Alpharetta, who runs restaurants.
When prices were high, “the people I depend upon in my business, it did change their behavior and they spent less.”
Fuel is a major expense for many businesses.
For instance, Larry Cooper runs an Atlanta-based transportation business that relies on buses and limousines.
“When prices were high, it affected our bottom line and the cost of our services,” he said. “Our customers have been pretty understanding about it. Everybody knows when gas prices are high.”
But the recent increase hasn’t been enough to panic drivers.
For example, Joella Kerber of Alpharetta was well aware of the pump price when gasoline was peaking at $4 a gallon. Now, with prices still well below last year’s peak, “I don’t pay that much attention to the price, even though I should.”
