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'Oil rally' spikes gas prices

By Johnny Jackson

jjackson@henryherald.com

AAA Auto Club South and U.S. Energy officials are predicting higher-than-normal gas prices this spring and summer.

"Our forecast is that we could see gas prices as high as $3.75 by summer time, barring any major hurricanes in the Gulf Coast," said Randy Bly, spokesman for AAA Auto Club South.

Bly said gas and crude oil prices took an unexpected upward turn last week, partly due to concerns of OPEC (Organization of the Petroleum Exporting Countries) discussing possible crude oil production cuts and remarks by Federal Reserve Chairman Ben Bernanke about lowering the interest rates.

Lower rates, Bly said, generally weakens the dollar against the Euro and increases oil prices as investors overseas buy up oil contracts.

"This particular oil rally is really about investments," Bly said. "European investors are taking advantage of the devalued U.S. dollar. [So,] the question is, 'Is this crude oil rally going to continue into the spring?'

"We're probably going to see this oil rally continue," he added. "We were certainly experiencing some lower gas prices for a while there, but we can still see gas prices increasing."

The industry has been experiencing record crude oil prices lately with per barrel prices reaching a near-record high on Wednesday, at $99.17 on the New York Mercantile Exchange (NYMEX).

Bly said he does not believe the increasing gas prices will change consumer behavior immediately.

"Overall, people are still going to take their hard-earned summer break ... regardless of gas prices," he said. "But we're looking into new territory here. There's obviously a threshold of pain, too. The issue of high gas prices will be with us for, I'm sure, the rest of our lives."

Chad Jones, of Covington, said he has gotten used to the rising gas prices.

"It doesn't bother me, because we've been hearing it for the last few years," Jones said. "If it's high, what's to do about it?"

Some opt to multi-task on shorter trips when they run errands and visit venues, while other consumers have opted out of making unnecessary trips altogether.

"Sometimes, I may not go for that reason, but I take it one day at a time," Jones said.

Both gasoline and diesel prices are projected to average more than $3 per gallon in 2008, according to the U.S. Energy Information Administration. The monthly average gas price is projected to peak near $3.40 per gallon this spring.

Tomeka Duffey, of McDonough, said gas prices are increasing the cost of living at a pace that is outstripping what most workers earn.

"It's already too high," Duffey said. "It's ridiculous, especially when they're not increasing salaries." She said she had been conscious of her spending on gas before, but has found it hard lately to keep up with rising prices.

This week, the national average price for regular unleaded is just over $3.08 per gallon, up from about $2.27 one year ago.

The average in metro Atlanta is $3.08, up from $2.13 last year.

In early March, oil refineries will begin to switch from winter blends of fuel to more expensive summer blends, which could account for a 70-cent per gallon increase at the pump.

"Things don't look, really, all that bright," said Bly of AAA Auto Club South. "We still need to think about saving gasoline on an individual standpoint. Driving a more moderate speed, avoid quick starts and quick stops. Those are things that we can do on our own that would help on the bottom line."

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On the net:

Fuel Gauge Report: www.fuelgaugereport.com