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Monday, June 01, 2009

Gas Prices Increase As Summer Begins

Prices Up But Still Considerably Lower Than This Time Last Year

Since May 1, gas prices have risen an average of 25 cents per gallon, leaving many drivers wondering, "Why the sudden increase?" Surprisingly, the reasons have more to do with the change of season rather than the economic slump. Gas demand is expected to rise as both more drivers hit the road for the holidays and a mandatory seasonal change-up to the summer fuel recipe is implemented.

According to a price survey from AAA Auto Club South, the average price for a gallon of regular gas recently rose to $2.40 in Miami-Dade County, Florida and $2.36 cents in Broward County, Florida, up about a nickel in each county from the previous week. The average Florida price was $2.33, while national average was $2.31.

If that seems high, remember that the average price is still 38 percent less than this time last year when a gallon was $3.88 in Miami-Dade and $3.82 in Broward — and showing no sign of abating. By July of ‘08, gas prices reached their height of about $4.15 a gallon in South Florida.

Whether the quarter hike is severely crimping wallets depends on whom you ask, but some South Florida drivers said they are not worried about returning to last year's record high prices.

As he was putting $20 of gas into his BMW 321i at a Shell station, Ricardo Ordonez said, "We have passed the whole scary time when we were watching every cent at the pump. That whole nightmare of gas going up is behind us. This seems normal."

"This is pretty consistent with what we have seen in previous years. We tend to see a run-up in spring," agreed Gregg Laskoski, a spokesman for AAA Auto Club South.

Starting May 1, refineries are mandated by federal law to adjust the blend of gasoline sold during the summer months. To formulate the new fuel, nearly all of the nation's 150 refineries shut down almost simultaneously. Some use the hiatus for repairs and to perform annual maintenance duties, which causes a short-term dip in supply. Laskoski pointed out that during the summer season, fuel itself is also more expensive.

The rise in fuel consumption after Memorial Day, the annual kickoff of the summer driving season, completes the typical seasonal price increase recipe. After Labor Day, the fuel blend reverts back, demand subsides as summer traveling stops, and gas prices come down in price slightly.

An economist with the American Petroleum Institute (API) said crude oil costs, which rose by about 30 cents per gallon since mid-April, also played a part in May's increases. "The influences on retail gas prices is not necessarily one-to-one or lockstep, but since you need crude to manufacture gas, the cost of crude might show up" in the price, AAPI's Ron Planting said. In May, oil rose to above $57 a barrel, up from $35 a barrel in March.

That's a significant decrease from the record high of $147 reached July 2008, when gas prices soared.

John Labriola, a spokesman for Miami-Dade County Transit, said one effect since last July is a spike in ridership on the county's buses and railways. Though gas prices have settled considerably, mass transit usage has not dropped.

"There was a slight fall-off, but we didn't see any kind of dramatic reduction in ridership because we find that once people start using transit and discover the benefits, rather than stewing in their cars in rush hour gridlock, people tend to stick with it," Labriola said.

Another factor adding to the continuous usage during these difficult days is the savings earned by riding mass transit.

"Taking transit is one way to save money on gas as well as wear and tear on your vehicle. You can even lower your insurance premium."

The recent rise in gas prices is creating some grumbling in certain quarters. Prices had plummeted to as low as $1.71 in Miami-Dade and $1.66 in Broward during January.

Topping off her Toyota Sequoia for $60 at an Amerika gas station, Magaly de Lázaro said, "Every time I fill up, I notice it getting more expensive. I still have to take my kids to school, to their sports. I used to pay about $40 to fill up."

Drivers worry that prices will soar back to the dizzying heights of 2008, but Laskoski said, "It's reasonable to think the peak price we could expect this year would fall between $2.50 and $3."

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