Bet on higher gas prices, analysts say - East Valley Tribune: Business

Bet on higher gas prices, analysts say

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Posted: Tuesday, August 30, 2005 6:48 am | Updated: 8:26 am, Fri Oct 7, 2011.

It’s only a matter of how much gasoline will rise as opposed to whether it will rise at all, experts say. Hurricane Katrina’s path through the Gulf of Mexico and New Orleans initially caused refineries, oil platforms and the Port of New Orleans to close.

And while the damage is still being assessed, gasoline prices are expected to rise at least 15 cents this week alone.

"They’re going to go up. We see them rising by about 15 cents in response to this storm," said Jacob Bournazian, an economist with the Energy Information Administration, a federal agency, in Washington, D.C.

So far, gasoline prices across the East Valley don’t reflect the hurricane’s impact, said David Cowley, AAA Arizona spokesman.

The average price of a gallon of gas in the Valley is rising at about 1.1 cent per day, Cowley said. That put the average price of a gallon of regular gas in the south East Valley at $2.64 and at $2.68 in Scottsdale on Monday, AAA Arizona data show.

"Everything makes the gas prices go up and nothing makes it go down," said Kathryn Ethington, of Mesa, as she spent $40 to fill up her tank at the Quik Trip at Mesa Drive and Baseline Road in Mesa.

Cowley said that once the storm has passed and the extent of Katrina’s damage to the oil infrastructure is known, "we’ll have a better idea of what might happen to prices in the long term."

"If they’re able to bring refineries right back on line, this will be just a blip on the radar screen. But if there’s damage . . . the long-term impacts on supply will become very real."

On Monday, Gov. Janet Napolitano asked the state Department of Weights and Measures, the consumer agency charged with inspecting fuel pumps, to step up the number of inspections it conducts on gas stations statewide.

Under the current system, accuracy rates are about 90 percent; however, better equipment and more inspections would increase that to 95 percent, the governor’s office said.

Despite rising gas prices and the promise of more hikes, Valley economist Elliott Pollack said it hasn’t significantly hurt the overall economy.

"Incomes are still going up, the employment outlook is still good. As long as the economy remains strong, it will affect things, but not much," Pollack said.

"I’m embarrassed to say that I haven’t changed any of my habits. I drive whenever I want to, wherever I want to," said Sherry Lavin, of Mesa.

But Chandler resident Cheri Marino, a married working mother of two, said she’s juggling things and staying close to home because of the cost.

"I just can’t imagine how any pocketbook isn’t feeling this," Marino said pumping gas at the Warner Road and Arizona Avenue Quik Trip in Chandler.

Tracy Clark, an economist at Arizona State University, said the potential for a release of oil onto the market from the nation’s strategic oil reserve may not have a substantial impact on prices but could help overall.

"The way it helps is a bit more psychological than anything else," Clark said. "The oil infrastructure worldwide is under a lot of strain right now. Oil traders are jumping at shadows."

The oil markets, which are in turn reflected in gas pump prices, are sensitive to changes in the status quo, including Hurricane Katrina.

"Everybody perceives the (world’s oil production and refining) system as being kind of fragile. . . . Any political disturbance in an oil producing country like Venezuela or Niger can have a fairly big impact on prices that seem to be a bit more than the actual event would warrant," Clark said.

Back at the Baseline Road gas station, Kathryn Ethington remained skeptical about the fallout from Hurricane Katrina, even if the refineries escape unscathed.

"Even if there’s no damage, you know it’s not going to go back down to where it was before," she said.

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