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Updated: 9:39 p.m. Tuesday, Jan. 10, 2012 | Posted: 9:38 p.m. Tuesday, Jan. 10, 2012
By Dave Larsen and Ed Richter
Staff Writer
Local motorists could be paying more than $4 per gallon for gasoline by Memorial Day, forcing them to spend a record portion of their family budget filling up their vehicles, oil industry analysts said.
The higher prices are expected because of seasonal demand patterns, rising tensions with Iran and increasing demand for oil from China, said Patrick DeHaan, a senior petroleum analyst for GasBuddy.com.
Last year was the priciest ever for gasoline. In 2011, the average gallon of regular gas sold for a record high of more than $3.51, with the typical U.S. household spending $4,155 to fill up at the pump, according to industry data.
“Since we are forecasting higher prices this year I would say that Americans should anticipate spending more on gasoline in 2012 than they did last year,” DeHaan said.
At the Kroger fuel center in Liberty Twp., motorists kept a close eye on gas pumps as they were filling up their vehicles. And news of higher pump prices by summer was unwelcome.
“It’s hard on discretionary income if it goes up to $4.50 a gallon, especially with vacation season and the kids home from school,” said Lori Andy of Liberty Twp.
On Tuesday, she pumped 17 gallons of gas into her vehicle for $56, which included 10 cents off a gallon Kroger discount.
“It ties up money,” she said. “It’s going to be hard, but we’ll have to find other ways to cut back.”
Jennifer Toney of West Chester Twp. hadn’t heard the news of projected higher prices at the pump as she paid $58, including the 20-cent Kroger discount, to fill up her car with 18 gallons of gas.
The mother of four said the projected higher prices will be tough on her.
“I don’t know what we’re going to do,” she said. “Probably go to work, day care and home. Just the bare necessities.”
Greg Harter of Liberty Twp. said gas prices will continue to rise with whatever the market will bear. “They’re just going to continue to test the waters until they find it,” he said. “It’s like when there is something about to happen in the (Persian) Gulf or Iran, the price goes up. I’m surprised that it hasn’t jumped up to $4 a gallon already.”
Harter said the rising pump prices are going drive people to search other alternatives such as electric or hybird vehicles. He also said people will continue to pay higher prices for gas and will also continue to purchase gas guzzling cars. Eventually, he believes more people will go for more fuel efficient vehicles.
U.S. oil demand has fallen for 10 consecutive months, in part because of the sluggish economy and rising sales for fuel-efficient vehicles, said Ray Keyton, president and chief executive of AAA Miami Valley.
Crude oil prices on Jan. 4 soared to their highest price in several months at $103.22 per barrel because of fears that a confrontation between the U.S. and Iran could disrupt Persian Gulf tanker traffic carrying some 40 percent of the world’s sea-borne oil. “If that would happen then obviously everything is going to spike,” Keyton said.
Crude oil prices closed Monday at $101.31 per barrel. Price fluctuations are “reflected in every gallon of gasoline,” Keyton said.
DeHaan said rising demand for gasoline in China also is a concern. Chinese workers are buying cars at a record pace and the country is rapidly building its oil infrastructure. “That is putting tremendous competition and pressure on oil and gasoline prices,” he said.
A sudden slowdown of the U.S. economy might be the only thing that would drive gas prices down.
“That is the double-edge sword with gas prices,” DeHaan said. “Prices rise when the economy is improving; they fall when it is not.”
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