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.
Katrina's Aftermath
"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.
Hardship at Home
In the United States, Americans are struggling to cope with higher prices at the pump. In an ABC News poll, 44 percent say the rise in gas prices causes serious hardship. That's an increase of 10 points since last fall to another high. Seventy-four percent of those polled say President Bush is not doing enough, which is his worst rating on any issue.
The high gas prices hit Americans who make less than $35,000 a year and seniors who are on a fixed income the hardest. Because more minorities, women, and less-educated Americans tend to have lower incomes, they are also among the most affected by expensive gas.
In Milwaukee, it costs Clinton Tate $65 to fill his tank. He has no choice, because he is in charge of getting older family members to their doctors' appointments.
"Who is going to put a stop to it?" he said.
Hobson said she predicted the higher prices were here to stay, at least for a while.
"I wouldn't be surprised to see gas prices go over $3 a gallon," she said. "Demand always increases over the summer, and experts are predicting that we'll beat last year's high of $3.07 without any major problems like Hurricane Katrina."
She said the best hope of reducing gas prices was coming up with an alternative fuel source. But compared to other countries like Belgium, France and Germany where they pay about $6 a gallon, Americans are getting a bargain on gas.
"If you look overseas at Europe or even to Canada, gas prices are much higher than the prices we are coping with now," Hobson said. "I think that is what the future is going to look like."