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Murch: Beware the gas prices this summer

January 13, 2012
Steve Murch - Managing Editor , The Alpena News

Here's a Saturday pop quiz: Which of these statements is true?

A. The summer tourism season is set to take a hit

B. The economy is set to take a hit

C. Your pocketbook is set to take a hit

D. All of the above.

If GasBuddy is right, the answer is D. All of the above. GasBuddy is an online gas comparison website that also keeps an eye on markets and trends, and provides analysis of those markets and trends. The company just released its projections for this year, and to quote Uncle Cletus, "It ain't purdy."

If GasBuddy's projections come true, we are in for a very slow tourism season, higher prices for everything, which hits your pocketbook, and the brakes will have been pressed on the economy. The company predicts that from April through August the price of gas will be over $4 per gallon nationwide, which means even higher in Northeast Michigan. In September it projects gas prices on average over $3.80 per gallon.

On Friday afternoon, the price of gas in Alpena was $3.69. Looking at the GasBuddy map, 34 counties in Michigan were in the same general range as Alpena. Nine counties in Indiana, four in New York, and much of California were in that same range. The rest of the country is lower; the Rocky Mountain states are in the low $3 a gallon or less range.

So if the national average is going to go over $4, what does that mean for Alpena? The Memorial Day forecast for Detroit is $4.15-$4.50. Can you say $5 a gallon?

While the 2012 outlook isn't what I'd call rosy, we can look to Europe at their $6-$9/gallon gasoline and be happy that we're still not paying as much as some countries, Patrick DeHaan, senior petroleum analyst for GasBuddy, said.

I'm not sure I'd have used the word happy there, more like relieved. However, his point is that we still aren't paying through the nozzle as bad as Europe. Still, can we call that relief?

DeHaan and Gregg Laskoski, another GasBuddy petroleum analyst, point to Iran as a large source of the projected volatility in the market.

"Continued destabilization of Iran, and perhaps other parts of the Middle East will make a strong impact on gasoline prices. Continued threats will haunt the market and could drive prices higher. Iran continues to be a major factor that could result in higher gasoline prices in 2012, the report states.

The two also expect record gas and distillate exports to have an effect on the price, and the proposed pipeline from Canada could have an effect.

If their projections ring true, it could be a sad summer for Northeast Michigan. First and foremost, residents would get hit with gas prices around $1 higher than they are right now. Then, that cost will hit us in another way: higher prices for goods and services. There isn't much of a chance that retailers could afford to hold down prices if they're getting hit with higher transportation costs.

Motorists who drive a SUV may want to consider calling their banking institution and obtain a credit limit increase so they can afford this summer's fuel expenses, DeHaan said in the release.

Then, the tourism season will be non-existent. While we aren't the other side of the state, we still have a tourism industry that will take a major hit.

When all is said and done, it's a nasty projection no matter how you look at it. If not for a calendar, we could hope it was nothing more than a sad April Fool's joke. Unfortunately, April 1 looks like the beginning of the long, dry season.

All we can do is hope DeHaan and Laskoski are wrong.

 
 

 

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