Steeply Escalating Gas Prices Take Toll
UPDATED - Tuesday July 12, 2005 12:03am
CHARLESTOWN, R.I. (AP) - At the Gulf gas station off Route 1, business is booming. Fuel prices are at record highs and, in spite of the conservation efforts of some, motorists are pumping more than they did last year. Station employee Carl Ross said summer is the busiest season and that beach-goers appear willing to fill their tanks no matter the cost."Some of them complain," Ross said. "Not all of them. They know it isn't our fault."
The Energy Department said late Monday that the average nationwide price of gasoline jumped 10 cents last week to $2.33 a gallon — a new record that surpasses the April peak by a nickel.
Pump prices are highest on the West Coast, averaging $2.48 a gallon, and cheapest in the Gulf Coast, where motorists pay on average $2.24 a gallon, the agency said. In the Midwest, gas averages $2.32 per gallon, and on the East Coast, $2.31 per gallon.
Trilby Lundberg, who publishes a semimonthly gasoline price survey, said demand for gasoline was up 2.5 percent in June, compared with a year ago, and that prices could climb higher if crude oil prices stay around the $60 a barrel level. On Monday, crude futures settled at $58.92.
While gasoline is no doubt expensive, Lundberg pointed out that the all-time high, when adjusted for inflation, was $3.03 a gallon, set in March 1981.
That's little comfort to people like Jeannine Keough, who was making her way to the Rhode Island coast Monday morning.
"When you need the gas, you need it," she said, bemoaning how much it would cost her to fill her tank later this week.
"I'll just deal with it," said Keough, 50, of Pawtucket, R.I. For now, she's keeping her eyes open for the lowest price and using her car's air conditioning as little as possible.
Consumers aren't the only ones feeling the pinch.
Airlines are seeing overall costs skyrocket because of higher jet fuel costs, said Jack Evans, a spokesman for the Air Transport Association. Industry losses could total more than $5 billion this year, he said.
The industry is trying to pass along modest fare increases, "but in no way are air carriers recouping the majority or the totality of that fuel increase cost," he said.
While airlines have been hit hard, the country's largest trucking companies have weathered soaring diesel prices by tacking on surcharges.
"We're still not having any trouble collecting the fuel surcharge," Yellow Roadway Corp.'s chief executive, Bill Zollars, said. There's no slowdown in the demand for shipping, he added.
Indeed, demand for diesel fuel is up 6 percent in the past month, compared with last year, in spite of average pump prices of $2.41, an increase of nearly 40 percent in the past year.
Car makers aren't seeing sales drop because of high gas prices, even among gas-guzzling SUVs, said Lindsay Brooke, senior analyst for CSM Worldwide.
"In the summertime, there is always the kind of alarm that fuel prices go up," Brooke said.
Even large trucks and SUVs are selling well because consumers purchasing those cars can afford the relatively modest increase in gas prices, he said.
Gene Huang, the chief economist at Memphis-based FedEx Corp., said he does not believe oil prices are sustainable at today's levels because economic growth is decelerating and the global supply of crude, while tight, is increasing.
Huang said he expects U.S. gross domestic product to expand 3.2 percent in 2006, compared with his estimate of 3.5 percent for 2005.
"High oil prices create a drag on economic growth because it cuts into the corporate and consumer bottom line," he said.
Nevertheless, Huang acknowledged that the country is much more energy efficient than it was 25 years ago, so motorists and manufacturers aren't sweating as much about high prices as they would otherwise.
———
AP Business Writer Brad Foss contributed to this report from Washington
beta.abc3340.com |
