For gas prices, dog days ahead
After wild fluctuations, pump prices have steadied - but don't expect
As she gasses up her four-cylinder Honda Accord at the corner Mobil station here, seamstress Miriam Pulaski gazes at the price board and sighs.
It tells her that a gallon of regular unleaded gas costs $1.43.
"That price isn't bad for a small car in California," says the Yosemite-bound mother of three. "But we're going on vacation in our gas-guzzling SUV [sport-utility vehicle]. We don't know how far we're going to be able to go on our budget."
For other families who are already gunning the engines for Memorial Day weekend and vacations beyond, the unknown of gasoline prices has become more than a passing consideration in the wake of volatile fluctuations in recent months.
After hitting the lowest prices in history - adjusted for inflation - in February, gasoline costs made historic leaps in many regions. While they were just under $1 on average countrywide three months ago, they now average $1.24 - up 5.7 cents per gallon over last year.
Industry analysts say the worst of the price surge is over but are unwilling to assure motorists it won't go higher. Such predictions depend partly on demand, which is up nearly 3 percent over last year. That's usually a signal prices will go up. A burgeoning economy with record low unemployment is expected to increase demand still further.
Because of this, most experts predict prices will either remain at current increases over last year or move even higher.
"There are more than the usual factors coming into play this year, which means we can't give assurances one way or another," says Mitch Fuqua, oil industry analyst for the American Automobile Association. "The best we can say for now is if [prices] do go up, it won't be significant."
The other variable that is hard to predict, for now, is supply.
Faced with a huge worldwide glut of oil early in the year, OPEC producers dramatically cut production to boost prices.
Near the same time, four California refineries - which produce the cleaner, more expensive gas mandated here - had fires or other mishaps that caused production to plummet and prices to surge.
In some communities, prices rose to as much as $2 per gallon. Demonstrations ensued in several California cities as irate motorists cajoled politicians to launch formal investigations into price gouging.
But both the OPEC cut and the refinery fires have caused caution among those trying to forecast trends. The California energy commission says the state's 18 refineries are producing 8 to 10 percent less than normal because of the outages. Unwilling to predict when they will return to full capacity, most experts say the general curve for prices is up for the year.
"Any way you look at it, it's a tough call, but with demand increasing and supplies unknown, we will ultimately be seeing still higher prices sometime this year," says Fred Leuffer, oil industry analyst for Bear Stearns & Co. in New York.
But beside the minimal increase during the past year, dramatic regional differences could burn families such as the Pulaskis, depending on where they travel.
The price for regular, self-serve gas in states such Georgia, Arkansas, and Mississippi now averages $1.06 - compared with $1.34 per gallon in the West. That means about $340 difference for a trip of 1,000 miles - say, New Orleans to Nashville and back or Los Angeles to San Francisco and back.
"For us, that's a couple of nights in a nice hotel or a new TV set," says Mrs. Pulaski. "Sometimes I wished I lived in Arkansas."
If enough potential travelers choose the TV over hitting the road, prices could drop, but that is not likely, say most analysts.
"The long price crash of last December is over," says gas-price expert Trilby Lundberg, publisher of the Lundberg Survey. "With a good economy keeping demand high, combined with higher crude-oil prices from OPEC, gas prices are likely to continue rising. I see another summer of record demand approaching."