Peak Oil is You

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Page added on April 14, 2012

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How Long Will the Pain at the Pump Last?


Ways to save, with relief in sight

Numerous factors threaten to derail the U.S. economic recovery: The European financial crisis could worsen dramatically, causing a spillover effect in the United States. Businesses, which have added jobs in recent months, could stop hiring. Stock indices, which have been up for most of the year, could again turn south.

[See 8 Ways to Reduce What You Pay at the Pump.]

But one of the most imminent threats to the economy is one that Americans experience each day. Gas prices, which had held steady in the last year, recently shot up. According to AAA, the national average price for a gallon of gas one year ago was $3.71. Now, it’s $3.94. In many states, a gallon of gas now costs well above $4. Some experts predict that prices will continue to rise as the summer approaches.

High gas prices eat directly into household budgets. But rising gas prices also affect consumers beyond the home. Spending on other things decreases. People drive less, negatively impacting economic activity. And without increasing economic activity, a broader recovery can’t take hold.

Foreign and domestic roots.A series of events–both foreign and domestic–are causing the current gas-price spike. Tensions between Iran and the West have led to an embargo of Iranian oil. If the crisis can’t be resolved peacefully, gas prices will continue their upward march.

But according to John Townsend, manager of public and government affairs of AAA Mid-Atlantic’s office, events in the United States have also played a role in the spike. “We’ve had a number of gas refineries shuttered in the last two years, especially around the Philadelphia area and in the Pacific Northwest,” Townsend says. “So the refinery problem is primarily affecting the West Coast and the East Coast.”

Consumers in states affected by these refinery shutdowns are already paying more than $4 per gallon. The states include Connecticut, New York, Washington, D.C., California, Oregon, and Washington State (consumers in Alaska and Hawaii also pay more than $4 for a gallon of gas, but this is due to the cost of shipping.)

Townsend says consumers in the South and Midwest are more fortunate. Refineries in Texas and in the Gulf region have been steadily producing gas, keeping prices lower in these regions. But relative to prices a year ago, people are paying more for gas.

[See 10 New Retirement Hot Spots.]

Strategies for cutting gas consumption.The best option is to drive a car with good mileage, but Townsend acknowledges that for most Americans, buying a new car just to save money on gas is unrealistic.

Townsend suggests looking for savings elsewhere. He recommends buying groceries in bulk at box stores like Costco or Sam’s Club, instead of making repeated trips to the grocery store. He also recommends taking public transportation to work and telecommuting whenever possible.

Short of buying a more fuel-efficient car, the best way to save money on gas is to change driving habits. He says driving the speed limit as opposed to speeding saves gas. Avoiding congestion and jerky steps on the gas or break also saves fuel.

But poor driving habits like these are the hardest to break, Townsend says. “The only way people make these changes is that when prices are going up so rapidly, they have no choice but to change the way they drive,” he says.

[See How to Get Free Gas With a Rewards Card.]

Relief ahead? Some experts were predicating gas prices as high as $5 a gallon by the summer. But according to Gregg Laskosi, senior petroleum analyst at, a website that tracks gas prices throughout the country, there are signs that prices might be nearing their peak.

“There is government reporting out this week that shows us that we’re getting much better refinery output then we have in recent weeks,” Laskosi says. “We’re also seeing crude oil prices going down … lower than we seen in quite some time.”

“Can we say definitely that prices have peaked? No, but it does seem like we’re moving into a period where prices plateau,” he adds. “In all probability, it’s starting to look like we’re approaching a peak.”

Laskosi warns that this peak could last quite some time. He says prices should remain close to their current levels throughout the summer. In the fall, he expects prices to go back down. “We could see that plateau for an extended period,” Laskosi says. “We’re not out of the woods yet.”

Chicago Tribune

7 Comments on "How Long Will the Pain at the Pump Last?"

  1. BillT on Sat, 14th Apr 2012 11:35 am 

    First, there has been no ‘recovery’. There HAS been a lot of BS and propaganda by our government to fudge the numbers and pretend that things are getting better when they are not. Gas prices have just begun their climb into the stratosphere. Wait and see.

  2. Kenz300 on Sat, 14th Apr 2012 4:13 pm 

    Every individual, business and politician needs to develop a plan to deal with higher energy prices and reduced supplies. China is the driving force in oil prices using more and more oil every year. Demand is increasing faster than the supply as China is now the worlds largest auto market and soon to be the worlds largest economy.

  3. pete on Sat, 14th Apr 2012 5:39 pm 

    I pay 55.9/liter for propane.
    3.8 liter/ us gal. plus eff.loss = 2.25/gal (should go to 49.9 like last summer)
    gas is 1.20/liter * 3.8 = 4.56/ gal.
    I knew this was going to happen, and get worse, due to oil wars. So I was SMART and I did not sit on my ass and talk about it, I did something in 2005. Also knowing that fracking was going to take off and propane is a byproduct also helped. Iran talks are going nowhere, 20% is needed for medical, I myself have had 20% injected twice in 5 years. And fill in Fowdow ? are you crazy, all that work and it just guarantees the rest gets bombed.
    read or watch “King Rat” 99.9 of you will be sucking hard when the SHTF, but I will be KING RAT, trading and buying items before they go up in value and selling at their peak price, driving, NOT BUSING OR WALKING, packages and such. History can teach us all lessons that we will face in the future.

  4. Arthur on Sat, 14th Apr 2012 9:30 pm 

    Question: “How Long Will the Pain at the Pump Last?”

    Answer: “When you abandon your car.”

  5. Rick on Sat, 14th Apr 2012 11:45 pm 

    Peak Oil folks, the price will continue to go up, until no one can afford it. But, transportation is one thing, oil is also used in industrial BS farming. Humans are screwed. Start gardening, now!

  6. Kenz300 on Sun, 15th Apr 2012 3:21 am 

    40+ mpg is better than 9 mpg.

    You can wave as you go buy the gas station if you are driving an electric.

    Long haul truckers are switching to LNG.

    GM, Ford and Chrysler are selling CNG fueled trucks.

    Honda is selling a CNG fueled car.

    FedEx and others are upgrading their fleets to LNG, CNG and electrics to save money on fuel costs.

    Some individuals, business and politicians are starting to plan to deal with higher energy prices and reduced supplies. Too many others with wait until they are forced to change by higher prices.

  7. BillT on Sun, 15th Apr 2012 3:44 am 

    Kenz…few electrics will ever be sold. There are not enough people left in the Us who can afford any new car, and certainly not something that will have no trade-in value or cannot be repaired at the local garage. Electric and the other hybrids are toys for the wanna-bes…not reality.

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