2011 Begins With Gas Price Spike
“It sucks, but you have no choice,” said Curtis Carter, 32, as he filled up at a BP station at N. Clark Street and N. LaSalle Boulevard in Chicago. The Windy City currently has the title for the country’s highest recorded gas prices. This particular station was selling a gallon for $3.55.
“I do a lot of driving between here and the suburbs, but it helps that I’m driving this,” said Carter, nodding to his 1996 Toyota Tercel. “I still get about 30 to 35 miles per gallon, even in the city. I usually only fill up about once a week.”
Jake Wishnoff, 18, has a different take. “It’s definitely a burden financially. I live on my own, so this is terrible,” he said. “I knew Chicago had the highest prices, but even two months ago it was only at $3.15 or $3.20.”
For those who do not closely follow crude oil and gas prices, this price spike is not typical. Normally, fuel prices drop between November and January while hitting high tide in the late spring and early summer. For the past month, crude oil prices have hovered around $90 per barrel.
“This is a bit of a departure,” said Tom Kloza, chief oil analyst for the Oil Price Information Service. “Even though demand in the U.S. has been pretty flat, starting in May the rest of the world has had a larger appetite for gas, diesel and jet fuel.”
Every year for about the past two decades, oil has become increasingly valuable, Kloza explained. Now a proliferation of financial instruments, such as crude oil futures and options, has contributed to price instability. Kloza also speculated that a particularly cold winter in the Northern Hemisphere has not helped matters.
With prices already this high this early in the year, there has been rampant speculation that gas could reach $4 per gallon. When prices hit that economy-shocking level in 2008, our Gas-Saving Moment of the Day feature did little to stave off the dire repercussions.
“There’s no doubt it contributed to the financial collapse,” Kloza said. “As people spent more money on gas, they spent less elsewhere, so it was undoubtedly a factor.”
Still, Kloza believes we should be far from panic mode. “There is a lot of hyperbole about where prices will go. People will mention the possibility of $4 or $5 per gallon because it’s a good sound bite that will get attention, but I think we’ll see a peak in the first half of the year. Maybe $3.25 to $3.75 nationally and possibly $100 a barrel for crude for a brief time.”
Not that this means such prices aren’t worrisome for many Americans. If $3.50 for a gallon of gas poses a financial challenge to the household budget, families will be in for a rough spring.
Wishnoff is one such individual. Asked what he would do if gas hits $4 per gallon, he said, “Selling my car and taking the bus.”
