Creeping back up


Published: Saturday, January 4, 2003 at 6:01 a.m.
Last Modified: Saturday, January 4, 2003 at 1:18 a.m.

After dropping in mid-December, gas prices have crept back up in recent weeks, primarily due to a lengthy strike by oil workers in Venezuela and continued worries about Iraq.

The U.S. Department of Energy reported that average prices for unleaded gasoline rose 4 cents to $1.44 a gallon at the start of this week, the third consecutive weekly rise and the highest price since early November 2002. Current prices also are more than 34 cents higher than average rates a year ago.

Gas prices at most stations around Gainesville are between 5 cents and 15 cents higher than the energy department's national average. Several stations on 13th Street are selling regular unleaded at $1.49 a gallon, and locations in northwest Gainesville are averaging $1.55 a gallon. Most convenience stores on Waldo Road are offering regular unleaded around $1.53 a gallon.

The strike in Venezuela - a country that supplies more than 7 percent of the United States' crude oil, according to the energy department's latest data - has depleted domestic stocks and it could spike gas prices for the next several months if the situation isn't resolved, said Mark Zandi, chief economist with Economy.com, a Pennsylvania-based economic research firm.

"Inventories are falling rapidly," Zandi said. "I think motorists and homeowners who use heating oil can expect to pay more over the next couple of months and perhaps through the first half of the year."

Crude oil is shipped from around the world to U.S. refineries and used to make gasoline, home heating oil and other fuels. Unrest in the Persian Gulf, which supplies more than 11 percent of the United State's crude oil, is also causing volatility in pricing.

Members of the Organization of Petroleum Exporting Countries (OPEC) have agreed to increase production due to the problems in Venezuela. But it takes longer for OPEC's oil, which comes mostly from the Persian Gulf, to arrive on U.S. shores, Zandi said.

"They're trying to fill the void, but, unfortunately, it takes too long to get into the energy market and can't make an immediate impact on pricing," he said.

The time following the Christmas/New Year holidays typically results in a drop in travel, thus decreasing the demand for gas and easing prices. That probably won't happen this year even if fewer people take to the road in their cars, said Jim Smith, president and chief executive officer of the Florida Petroleum Marketers and Convenience Store Association, a Tallahassee-based trade group.

"Normally, the minute the holiday season ends, you'll see a drop in gas prices," Smith said. "I'm surprised Venezuela hasn't come to an agreement yet. I think there's still a sufficient amount of crude oil out there, it just has to come from other sources. This would be a lot worse for prices if it was happening during a peak driving season, like June or July."

A daily price report issued Friday by AAA had the national average at $1.45 a gallon for regular unleaded gas. That's up from $1.38 a month ago and a huge increase from $1.10 a year ago.

Gainesville's daily average price for Friday was $1.55 for regular unleaded gas, according to AAA. That is a 5-cent increase from $1.50 a gallon a month ago and up sharply from $1.20 last year at this time.

"It's definitely going up, no question," said Gregg Laskoski, a spokesman for Tampa-based AAA Auto Club South.

Joe Coombs can be reached at (352) 338-3102 or coombsj@ gvillesun.com. Wire reports were included in this story.

Reader comments posted to this article may be published in our print edition. All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

Comments are currently unavailable on this article

▲ Return to Top