Gas Prices Put the Pinch on Americans
April 11, 2006— -- At gas stations in the suburbs of New Jersey, in Milwaukee, Wis., and all across the country, families are feeling the pain at the pump.
"It's just very difficult to get by," said Janine Arceri of New Jersey, who said she could not afford a vacation because of all the driving she did shuttling her three daughters to soccer, gymnastics and dance classes. "The prices of gasoline have become astronomical that you can't keep up with your bills."
AAA says gas prices have jumped more than a dime in the last 10 days, and a gallon of regular is up 42 cents since just last month. It costs Arceri $33 to fill up her tank.
From what the Energy Department said today, there's not going to be any relief this summer, either. The government's new seasonal outlook predicted regular gasoline would cost an average of $2.62 a gallon this summer. That's 25 cents higher than it cost last summer, and prices could be higher if there are any supply disruptions.
"We are now paying the highest gasoline prices in six months," said John Townsend of AAA. "We've not seen prices like this since [Hurricanes] Katrina and Rita."
On Sept. 5, 2005, about a week after Katrina hit, a gallon of regular unleaded cost $3.07. A year ago, a gallon cost $2.28. Experts say they expect gas prices to continue to increase this week as U.S. supplies of gasoline and oil dip.
"A couple things are happening with the gas itself," said "Good Morning America" financial contributor Mellody Hobson. "Refineries are switching from winter to summer gas blends, which drives up prices. There are also new rules in place that require cleaner gas, and that's creating shortages for the time being. And in general U.S. production of oil is also down."
According to U.S. Minerals Management, 23 percent of the Gulf of Mexico's production is still off-line and oil platforms are still evacuated because of Hurricane Katrina. Since Katrina, 144 million barrels of oil, or roughly the amount the country consumes in a week, has been lost.
Adding to the factors raising the price at the pump is that international production has not lived up to expectations. Russian output is not growing as quickly as had been expected and Iraq is still producing just a trickle of oil. Geopolitical concerns in Iran, Venezuela and Nigeria are forcing traders to doubt future expansion and production in those areas. Meanwhile, global demand -- especially in India and China -- continues to grow.
