Everyone can’t help but stare at the gas station billboards as we drive by them these days. We are all asking the same question…. Will gas prices keep going up…
Mrs. Cathy Jett explains why
The deteriorating situation in Libya sent gas prices soaring 20 cents a gallon in Virginia last week, which came to an average $3.26 a gallon for regular.
That’s one of the largest jumps ever for that period of time. The record was set in the wake of Hurricane Katrina, when the price jumped 34 cents in one week.
The increase in the price people paid at the pump in Virginia was 3 cents a gallon higher than the national average of 17 cents, according to VirginiaGasPrices.com. But the national per-gallon average is still higher at $3.34.
Prices Sunday also were 66.5 cents a gallon higher than the same day last year and 25.8 cents higher than a month ago.
They soon could reach $3.50 a gallon–and possibly go as high as $4 a gallon, said Lon Anderson, spokesman for AAA-Mid Atlantic in Washington. The price of gas, he said, isn’t high enough yet to cover the rising price of crude.
U.S. oil prices surged above $100 a barrel last week, while prices in Europe hit a high of $120 a barrel–levels not seen since 2008. They fell to $96.75 yesterday amid reports of increased production from Saudi Arabia, which offset worries about the ongoing revolt in Libya, according to CNN.
The Middle East ranks behind Canada, Mexico and Venezuela as the United States’ major suppliers of crude oil, but the region is critical to the world’s supply and wields a powerful influence over prices, Anderson said.
“Right now, the commodity markets are very concerned that what happens in the Middle East could mean a loss of production or supply,” he said. “That’s why they are bidding the prices up on the commodities market.”
Normally, prices would be decreasing because supplies are up and demand is down due to the recession, Anderson said. People are driving less, and manufacturers haven’t geared back to up pre-recession levels of production.
“I don’t think we should be looking at $5 a gallon yet; we’ve only been over $4 one time,” he said. “That’s still seen by consumers as outrageously high.
“Could it go to $5? Yes. Is it likely to? I would hope that the Middle East would get a handle on its turmoil before that happens.”
Skyrocketing gas prices have the potential to take the wind out of the sails of the economic recovery because the cost of transportation is factored into the price of goods.
“When gas prices go up, this is money that goes right out of consumers’ pockets that they literally have to burn,” Anderson said, “and don’t have to spend on appliances, vacations, new homes, whatever.”
Cathy Jett: 540/374-5407