As gas prices crept over the $2.50 per-gallon mark last week, the inevitable question is beginning to emerge of just how high prices could get.
“It makes me wonder if we’re headed for $3 a gallon,” said Jerry Clemmons Monday afternoon as he filled the tank of his pickup at the Sprint Mart on Highway 45 near downtown. “There’s not much you can do about it. You have to buy gas whatever they charge. I just hope it doesn’t get much higher.”
The statewide average for a gallon of gasoline is currently $2.53, said Don Redman, regional spokesman for the American Automobile Association.
“Every time the price goes up, people wonder where it’s going to go,” Redman said. “But, you know, the prices now are comparable to what we saw this time last year. For some reason, $3 gas is on everyone’s mind, and it has already passed that point in some areas.”
Redman said prices began to rise in March and have continued to climb as the summer driving season begins — by about 10 cents in the last month alone.
And while it’s likely to go higher, Redman said the forecast indicates the price should top out between $2.60 and $2.70 per-gallon.
“Usually, you see about a 50-cent increase from January to June,” Redman said. “What’s happening this year is not unusual.”
Redman said there are several factors that influence the rise in prices — converting to the federally mandated “summer blends” that are more expensive to produce by refineries, production rates at refineries, which only approach full capacity as the summer driving season begins, and of course, world supply of crude oil.
With the impact of the U.S. government’s sanctions on Iran’s oil sales beginning to have its full impact, Saudi Arabia will own more of the world market, which means it can effectively dictate crude prices.
“Crude oil is selling for about $63 per barrel right now,” Redman said. “It wouldn’t hurt Saudi Arabia’s feelings if it went to $70.”
Through its ability to quickly ramp up supply, Saudi Arabia could flood the market with oil, driving down prices at the pump, or limit production, which would drive the price up but also encourage less consumption.
“For Saudi Arabia, it’s always a calculated decision,” Redman said.
On a more positive note, Redman said some of the gas price increase regionally could be attributed to a growing economy.
“Anytime the economy grows, that requires more energy,” he said. “In our region, the demand has been outpacing supply even compared to last year.”
Redman said the price of gas is likely to rise until June, if history is any indicator.
“It will probably go up another 10 cents or so,” he said. “Last June, the price was $2.63 in Mississippi, so that’s about where I would expect it to be going into June this year.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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