Gas prices soar to record high; concerns on inflationary impact of prices

PROVIDENCE – Gasoline prices surged to their highest February price ever, reaching an average of $3.36 in Rhode Island, AAA Southern New England reported Monday.
“For the month of February, we have never seen gasoline prices in Rhode Island this high,” said Lloyd P. Albert, AAA Southern New England senior vice president of public and government affairs, while noting that the highest average recorded was in July 2008 at $4.11 per gallon.
“But what’s concerning now is that prices are usually at their lowest in December and February … because demand is usually lower. It’s concerning for what this may mean for [gasoline prices] in May or June,” said Albert.
Gasoline prices have been on the rise since October, largely because of oil traders’ belief that emerging economies – India, China and others – would be requiring more oil to meet their economic growth goals, Albert explained. Recent unrest in the Middle East, however, has made oil traders “very nervous, very skittish,” fueling the recent surge in prices.
Volatility in the Middle East is making it hard to predict with any certainty what this means for gas prices in the near future, he said.
“But what we do know is that prices tend to rise from the middle of the winter to the peak driving period, which we define typically as June and July,” Albert said.
“[It] looks like we can see somewhat higher prices going forward. Where [gasoline prices] will peak out at is very hard to say at this point but there is certainly concern on the inflationary impact of these prices.”
Albert also noted that prices skyrocketed last week when the oil flow out of Libya was disrupted despite the fact that the country’s nearly 1.6 million barrels per day is mostly destined to Europe and not the United States.
For Rhode Islanders, just two days have made an impact on pump prices, Albert added, noting that on Friday, prices averaged approximately $3.30 locally.
“It’s a very, very dramatic run up in prices right now and everyone is wondering where it might stop,” he said.
“People are starting to rethink their driving habits, like they did two-and-a-half or three years ago, when prices topped off above $4. They’re thinking about driving more slowly, accelerating and stopping more slowly, consolidating trips, and lightening the load in the car.”
In Massachusetts, gasoline stood at an average of $3.30 for self-serve, unleaded regular; the Bay State’s lesser gas lien tax, at 23 cents, is the reason why the state’s weekly gas average is consistently less than Rhode Island’s. The gas lien tax in the Ocean State is 30 cents and nationally, 18.4 cents.
Rhode Island’s $3.36 average price of self-serve, unleaded regular was a 15 cent increase over last week and represented an increase of 21 cents from the beginning of the year. Rhode Island matched the national average this week.
In its survey, AAA found prices in Rhode Island ranging from $3.23 to $3.47 per gallon for unleaded regular this week.
At stations in Rhode Island this week, the survey found average self-serve prices of $3.47 per gallon for midgrade unleaded, $3.60 for premium unleaded gasoline and $3.78 for diesel.
For more information, visit AAA.com