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Pump prices affect Denver
 
The above is reflective of “average” gasoline prices consumers encounter along their commute. (Photo credit: La Voz Staff)
 

By Ernest Gurulé
News@lavozcolorado.com
 
07/12/2011

Somewhere in the Atlantic Ocean, there is a gigantic tanker---three times as long as a football field---headed to an American port with a cargo of slightly more than four million barrels of crude oil. Not far behind, there is a line of similar sized vessels carrying the same payload and headed to the same customer. It is the maritime equivalent of a drug delivery to a client willing to pay any price to satisfy an addiction. It is an essentially untreatable addiction that costs American consumers a billion dollars a day.

This addiction is costing Colorado customers approximately $3.66 a gallon at the pump, still a relative bargain compared to May’s peak price of $3.98. But before celebrating, drivers may want to put it in ‘park.’ A year earlier, statewide gasoline prices averaged $2.79 a gallon. But no matter the price per gallon, Coloradans, and everyone else, are still having trouble absorbing pump prices.

“If you are on a fixed budget, that means something else has to give,” said Colorado School of Mines Economics Professor Daniel Kaffine. For some families, that could mean sacrificing daycare, or even cutting back on groceries. “It really takes a bite out of people’s disposable income.”

A young woman who works the counter at a Denver coffee shop and asked that her name not be used says gas prices are a huge consideration for her and her two young children. “I like to take my kids to the movies,” she said. “But when gas prices started going up, I had to choose between treating them to the movies or paying for gas to get to work. I feel bad that it’s come down to this but what choice do I have?” She’s hoping to get a job closer to home to eliminate her ten-mile commute.

There are also other ripple effects associated with price per gallon spikes. When gas reaches a certain price point, people tend to stay home more, which means attending fewer movies, dining out less; simply spending fewer dollars away from home, Kaffine said. One way or another, the reverberations at the pump tend to be felt far and wide.

For the time being, gasoline prices have stabilized. Statewide, AAA says Coloradans are paying an average of $3.66 a gallon. The state’s highest gas prices are in Vail where the average price is $3.92. Puebloans catch the biggest break with gas averaging $3.47.

Coloradans and everyone else caught a break on gas prices just as the summer driving season began. A steady price spike that began early in the year finally peaked just before the Fourth of July, said AAA’s Wavelyn Dreher. A lot of people hit the road for the three-day holiday weekend.

“People were still making plans for travel when prices started going down,” Dreher said. Had the price dip begun a little earlier, it’s possible that even more people would have taken to the road, she said.

AAA believes prices have stabilized for at least the rest of the summer and old driving habits, including driving vacations of trips of at least 50 miles from home, will resume, but different than in the past. “They’re staying with friends and family instead of a hotel.” Some families are also saving money by opting for road trip picnics instead of restaurant stops. “They’re really gearing down.”

Holiday travelers, nonetheless, crowded the highways for the Fourth. AAA estimates that nearly 40 million Americans hit the road over the holiday. And, depending on a number of factors, including weather, the start of school and political considerations in oil producing countries, that number is expected to hit the road again for the end-of-the-summer Labor Day weekend.

But just because gasoline prices are down, Kaffine said, no one should think they will remain this way. “It’s still a seller’s market.” With two new and huge markets, China and India, developing the same unquenchable thirst for oil as the U.S., oil producing countries can do pretty much whatever they choose in setting price points. “If you’re that Middle Eastern country and want to sell that barrel of oil, prices can certainly go up.”

Middle Eastern crude oil sellers, from Saudi Arabia to Libya, which sits on the world’s largest reserves, are well aware of that. They’re selling a higher percentage of product in China and India than ever before. And General Motors reports, for the first time, that it is selling more new cars in China than in the United States.

For the first six months of 2011, GM sold 1.27 million new models in China. The auto giant sold 1.26 million new units in the U.S. And, GM reports that sales are slightly down in China from a year ago.

But no matter what Coloradans are paying for gas, it can always get worse. In fact, with a few notable exceptions, it already is worse for consumers all around the world.

Drivers in Norway, for example, are paying nearly three times what Americans are paying for gasoline. And, in most European countries, consumers are paying in the five and six dollar range for a gallon of gas.

On the other end of the spectrum, drivers in Saudi Arabia fill-up for less than fifty cents a gallon. But, Venezuela comes out on top for consumers. The average price for a gallon of gas in Caracas is a dime.

 

 

 

 

 
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