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State Gas Prices Increase to $2.30

Posted on: Tuesday, 28 February 2006, 06:00 CST

By Alejandro Bodipo-Memba, Detroit Free Press

Feb. 28--Michigan gas prices have averaged over $2 a gallon for one year, and experts acknowledge that fuel costs will likely never fall below that threshold again.

"In general, $2 a gallon is a thing of the past," said Jim Rink, spokesman for AAA Michigan, which has 1.6 million members. "We have increasing global demand, decreasing availability of oil and higher costs associated with extracting it and refining it, so the days of cheap gas have probably been over for two or three years."

A survey of 2,800 filling stations across Michigan found that gas prices rose nearly 12 cents last week to average $2.30 a gallon. It was the largest single-week jump since the beginning of 2006. Across metro Detroit, prices increased 9 cents to $2.27.

Some consumers appeared numb to the news of the price increases.

"I just pay it," said Eric Williamson, a security operations manager with Securatex, who shelled out $41 to fill up his 2002 Ford Ranger pickup at the BP station on the corner of Woodward and Harper in Detroit on Monday. "I remember when gas was 89 cents. Now with everything going on in Iraq, I'm sure they'll keep going up."

From 1990 to 2000, the average price of gasoline in Michigan increased 34% from $1.17 to $1.57 a gallon. In the first five years of this decade, prices have shot up more than 40% to an average of around $2.20 gallon.

While drivers continue to feel the pinch of higher gas prices in their pocketbooks, some are beginning to consider alternatives to some of the vehicles with poor fuel economy currently in dealer showrooms.

A survey of AAA Michigan members found that 29% of respondents said they were "somewhat likely" or "very likely" to purchase a hybrid vehicle of some kind.

Williamson is one of those people.

"Yeah, I might just consider a hybrid or even a diesel seeing as they save on gas," he said.

Following the sharp rise in pump prices last week, crude oil prices dropped nearly $2 a barrel. Concerns eased about a possible disruption of Saudi Arabian petroleum supply due to the recent spate of terrorist attacks aimed at government-run oil facilities. Last week, security guards foiled a bombing attempt against the world's biggest oil processing complex.

Delivery of April crude oil futures fell $1.91 to close at $61 a barrel Monday on the New York Mercantile Exchange.

Oil prices had been on the rise in recent days following worker abductions and work stoppages in petroleum-producing nations throughout Africa, the Middle East and Latin America.

Nevertheless, Michael C. Lynch, president of Strategic Energy & Economic Research Inc. in Amherst, Mass., suggests there is "real danger" of global oil supply disruptions because of continued political unrest.

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Copyright (c) 2006, Detroit Free Press

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Source: Detroit Free Press

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