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Gas prices continue climb

Photo by Hugh Osteen

Photo by Hugh Osteen

By Johnny Jackson

jjackson@henryherald.com

Gas prices continue to rise locally as upheaval persists in the Middle East, outpacing previous projections and spiraling towards record high marks.

Metro Atlantans are not only paying a dollar more for regular unleaded gas, compared to a year ago, they are also paying more, on average, than other consumers across Georgia, according to AAA's Daily Fuel Gauge Report.

Tuesday's report noted an average price for a gallon of regular unleaded gas was $3.74 in Georgia. Metro Atlanta's average was $3.76 per gallon, 35-cents shy of the area's $4.11-per-gallon record high set on Sept. 16, 2008.

"Retail gas prices inched up slightly last week and are expected to do the same again this week, with average increases between 1- and 5-cents, respectively," said AAA Auto Club South spokeswoman Jessica Brady.

Retail gas prices this year are well beyond projections set a year ago by the U.S. Energy Information Administration (EIA), according to Neil Gamson, an economist with the EIA.

EIA's Short-Term Energy Outlook for April 2010 projected retail prices for the 2011 summer driving season, would average between $3.01 and $3.05 per gallon for regular unleaded gas. Crude oil prices were projected to average between $80.50 and $81.50 per barrel over the same time span.

"But this year, crude oil is more like $110 or $112 per barrel -- about $31 per barrel more than projected a year ago," Gamson said. "That would add about 75- to 80-cents more per gallon on gas."

The economist said refiners' margins were weak in 2010, and have grown strong this year, as refineries are claiming a larger margin in profits in the production of oil and gas products.

Gamson also points to uprisings and revolts in Middle Eastern nations as contributing factors to the unexpected and volatile rise in crude oil prices.

"There was a period of uncertainty with how this Libyan thing would resolve, but that hasn't happened," he said.

Gamson said average crude oil spot prices had dipped to about $85 per barrel on Feb. 18, and climbed to about $92 per barrel by Feb. 22. Market prices closed out the month of February at $97 per barrel, and ended the first week of March at $105 per barrel.

The economist estimates the world lost more than a million barrels of crude oil per day from fewer exports, during the period immediately following the initial revolts in the middle east region.

Meanwhile, demand for crude oil has continued to increase worldwide with the global economic recovery, said Gamson. Globally, more than 86 million barrels of crude oil were consumed each day in 2010, but experts project 88 million barrels will be consumed daily this year.

Brazil is a major competitor in global crude oil demand, according to Gamson. Nations in Asia and Africa, as well as other oil-producing countries in the Middle East, also have seen their oil consumption increase in recent years. Of all of them, he said, China is experiencing the fastest growth in crude oil demand.

China was marginally impacted by the global recession and has seen continued economic growth. Gamson said the effect has been an increased demand for crude oil.

China demanded 7.8 million barrels of oil daily in 2008. That demand grew to 8.3 million in 2009 and 9.2 million barrels in 2010. He said the nation is expected to grow its daily demand for oil to 9.8 million this year.

In contrast, the United States is still in the midst of recovering from economic recession. Gamson said the country demanded 19.5 million barrels of oil per day in 2008, but only 18.8 million barrels in 2009. He said the country's demand has grown ever since to 19.2 million barrels a day in 2010, with a projected 19.4 million in demand this year.