What's Driving Higher Gasoline Prices In 2001?
As American families plan their summer vacations, they will have to increase their travel budget for what will be another costly driving season. Gasoline prices around the country may surge higher than last year, resulting in one of the highest priced periods in more than 20 years. These prices will cause ripple effects throughout the transportation industry, resulting in higher airfares.
Prices are already well above the anticipated 2001 peak of $1.49 per gallon predicated by the Energy Information Administration (EIA) in April. The EIA forecast cautioned that the tightness of American domestic gasoline supply was vulnerable to sharp price increases if supply disruptions occur -- such as blackouts, refinery, or pipeline problems, as was the case in 2000 -- or if there is unpredicted demand. On April 23, 2001 the first unpredicted disruption occurred at the Tosco Corporation refinery plant outside Los Angeles when a fire on part of the production line shut down the nation's largest independent refiner and marketer of petroleum which normally produces 125,000 barrels per day.
Currently, the nation's gasoline reserves are five percent lower than last year and nine percent below 1999 levels. The shortage is due to high winter heating oil demand and breakdowns in production of the reformulated gasoline MTBE (methyl tertiary butyl ether) - a natural gas based additive that reduces emissions and raises the octane in gasoline.
The sharp rise in oil prices began in March 1999, reflecting two factors - rising world demand and the Organization of Petroleum Exporting Countries (OPEC) successful restriction of supplies. Demand has continued to grow worldwide since the recovery of the East Asian economic crisis in 1997, which had driven oil prices down to their lowest levels in thirty years. Since then, prices have rebounded and economies have recovered. However, consumers continue to feel $ticker $hock. Although the economy is slowing, consumers demand more gasoline for inefficient SUVs and light trucks and prices are increasing based on limited supply.
The Alliance to Save Energy offers the following to educate consumers on how to reduce gas prices and pollution:
- Check out some
consumer car buying and driving tips that decrease the pinch at the
pump: http://www.ase.org/media/newsrel/gasrelease.htm.
- Congress can help
reduce these high gasoline prices. Read Alliance to Save Energy
President David M. Nemtzow's testimony before Congress on the need for
fuel efficiency standards: http://www.ase.org/policy/testimony/commercetest.htm
- Shopping for new
wheels? http://www.fueleconomy.gov/
compares the efficiencies of different vehicles and offers more tips to
increase your savings.
- AAA offers
maintenance ideas to keep your vehicle running at peak performance this
summer:
http://www.aaamidatlantic.com/livenew/automotive/summer_gastips.asp.
This page was updated May 02, 2001
The Alliance to Save
Energy
1200 18th Street, NW, Suite
900
Washington, DC 20036
Phone:
202/857-0666 Fax: 202/331-9588
info@ase.org
http://www.ase.org/