Consumers feel crunch for jumps at the pump

[Oracle of Delphi]

NEW YORK - Jim Ammons grumbles to himself every time he fills up his Ford Expedition, but he says gas prices would have to almost quadruple to $10 a gallon before he’d ditch his SUV.

Still, paying $55 to fill his 20 gallon tank isn’t easy for the information specialist.

“This right here is catastrophic for a lot of families,” Ammons, 54, said this week at a Houston Chevron station that was charging $2.65 a gallon for regular unleaded. “A lot of them have to choose: Do I buy food, do I send my kids to school or do I fill up my tank?”

That choice may soon get a lot more difficult. The steep rise in oil prices to $90 a barrel over the past month means American consumers are almost certain to pay more for gasoline, heating oil, airline tickets and even food and goods that have to be transported great distances, experts say.

Some analysts are now predicting oil could go as high as $120 a barrel, but others argue that underlying supply and demand fundamentals do not support such a spike and that a drop in prices is more likely.

What is clear is that oil has become a magnet for “hot money” from hedge funds and other momentum investors betting that the trend for higher prices still has a way to run. The dollar’s decline, which makes dollar-denominated oil futures a bargain to overseas investors, also has played a role in the recent runup.

Absent an astounding rise in prices, few economists expect high energy costs alone to push the economy into a recession, as previous oil price shocks did in the 1970s and early 1980s. That’s because the economy has become more energy efficient, and incomes have grown faster than energy costs. On a percentage basis, the country spends half the amount on energy today than it spent in 1980.

Gasoline prices now average $2.76 a gallon across the country for unleaded regular, according to the Energy Information Administration. While that’s down almost half a dollar from their May peak, pump prices are still 53 cents higher than a year ago.

Gas prices usually fall sharply after Labor Day — they dropped 62 cents last year between the end of August and mid-October, for instance. But this year, prices have actually risen slightly since summer’s end. In part, that’s because oil futures jumped 30 percent since late August, topping $90 a barrel for the first time ever on Thursday.

Falling prices for ethanol, a gasoline additive, and rising imports of refined gasoline, which have helped keep supplies adequate, have played a role in keeping retail prices relatively subdued. But that’s not expected to last — many analysts now expect prices to rise by at least 10 to 15 cents a gallon, or more if oil pushes even higher.

“Consumers will now see higher prices at the pump in the coming months and weeks,” said John Kilduff, vice president of risk management at MF Global UK Ltd.

There are signs high fuel prices are already having an impact. The EIA says demand for gas fell 0.5 percent over the last four weeks from a year ago, and has been lower since Labor Day. That reverses a trend in recent years of steadily rising demand. During some weeks this summer, demand rose more than 1 percent over the previous year.

The EIA also expects heating oil costs to jump 22 percent this winter. Demand may slip a little, but there’s only so much homeowners dependent on that fuel source can do to cut back, especially if it turns out to be an unusually cold winter. The result may be less spending on other goods and services, which could hurt economic growth.

Article Continues: http://www.msnbc.msn.com/id/21381254/page/2/

[Paolino]

$2.65 a gallon? That'd be sweet.

We're a bargain at $2.91.

[daves87rs]

I get the feeling that gas will get higher....something will happen-I know it...

[cletus8269]

2.54 for 87 here in anderson sc. man, i remember when i could pull into the texaco, pump my 69 impala full of 93 (at 93 cent even) octane, go inside and get a 20 oz sprite and still have almost a dollar in change from a $20... freak you didnt even have to pay first you just pumped and then went inside. my what 10 years will change.

[Drew Dowdell]

I can't even fill up the Avalanche from empty anymore. PNC will only authorize $75 at a time when I pay at the pump.

[vonVeezelsnider]

1.15 a liter here... costs over 100$ to fill up the Venture.

[pow]

$3.29 here. Recently I've started driving less, trying out something called walking. I consolidate trips and hypermile when I do have to drive.

[daves87rs]

1.15 a liter here... costs over 100$ to fill up the Venture.

Ow.

[vonVeezelsnider]

It was great in '99 when we got our first Venture because gas was only 48 cents a liter, but there isn't any benefit to a 95 Liter tank anymore... period. So what if you can go Calgary --> Vancouver on one tank. It's hardly ever driven on the highway.

[cletus8269]

1.15 a liter here... costs over 100$ to fill up the Venture.

IIII EEEeeeeee! suddenly fred flintstones car is appealing.

[Oracle of Delphi]

When I was in Delaware last weekend, 92 octane was $2.76 at WAWA. I love WAWA!

[ocnblu]

Today it cost me $61.25 to fill up my Sierra, at $2.65 for regular at Wawa. It was bone empty and I haven't filled 'er up for two weeks.

[pow]

Drove 57-63 mph on the right lane today. The instantaneous fuel consumption meter showed a continuous 52 MPG for almost a minute! I was quite proud...

I ended up averaging 31.5 MPG over 28.4 miles freeway, 7.3 miles city, including two uphill stretches (1.9 mi and 2.3 mi). If I drove according to the original EPA estimates (which itself is hypermiling) of 21/30, I would have gotten 28.15 MPG. Usually I get about 23-25 MPG, so I saved ~$1.20 today.

I used Tiptronic to shift early, built momentum downhill so I could go uphill without changing throttle position or losing too much speed, and switched off the engine at one particularly long light, which probably saved me .5 MPG. At no point did I exceed 2000 rpm (except for maybe the few uphill stretches), and I did pretty good with traffic lights, "missing" only three (probably worth 1.5 MPG).

At the end of the trip, I filled up with premium at the Valero by our house. It was cheapest... $3.34/gal.

Edited October 20, 2007 by empowah

[VenSeattle]

I can't even fill up the Avalanche from empty anymore. PNC will only authorize $75 at a time when I pay at the pump.

Try filling up near airports or at truck stops. Those stations usually pre-authorize between $100-$250.

Many financial institutions are complaining to fuel merchants that the pre-auth limits aren't keeping up with costs... but there's a downside to increased pre-auths... if you have $70 in your checking and you only want to buy $10 in gas with your debit card, you can't. Double-edged sword.

That's not a problem personally, but my clients' cardholders complain religiously about this.