Gasoline at $2.75 a gallon expected by summer's end
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Gas prices are on their way up, above $2.50 a gallon Monday in Montpelier. They have risen nearly 40 cents in the last month. STEFAN HARD/TIMES ARGUS |
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By Thatcher Moats TIMES ARGUS STAFF - Published: June 9, 2009
BARRE – Gas prices in Vermont rose by almost 40 cents per gallon in the past month and are predicted to continue climbing into the summer.
But prices aren't expected to reach the levels of a year ago when gas averaged $3.98 per gallon across the state.
The average price of a gallon of gas in Vermont on Monday was $2.52 per gallon compared to an average of $2.15 a month ago, according to Tom Williams, the regional manager for AAA New England. That lags 10 cents behind the national average, which is $2.62 per gallon.
Analysts give different reasons for the recent price increase. But the price of oil is ultimately determined by the many people trying to guess the future of the world economy and the future price of oil, and then acting on those guesses, according to Art Woolf, a University of Vermont economics professor and financial consultant.
"There are thousands and thousands of players in this market, and what the market price ends up being is the best guess of all these people," Woolf said.
Lately, investors have been worried about inflation, which Woolf said is one of the top reasons the price of oil and gasoline has jumped.
"Whenever there's a fear of inflation people look for commodities, something physical to invest in," he said.
As those skittish investors buy lots of oil, the price goes up because their purchases limit supply, he said.
Many investors and oil producers have also been guessing that the global recession has bottomed out and that demand will grow in the next six to 12 months, Woolf said.
"If people think the price is going to go up, they are buying, which in itself drives the price up," said Woolf.
That belief can also cause oil producers to hoard oil because they hope to sell it for more down the road, which reduces supply, said Woolf.
On a local level, a $.033 gas tax went into effect on June 1, adding a few cents to each gallon, said Joe Choquette, a spokesperson for the Vermont Petroleum Association.
Even as AAA acknowledges that it failed to predict the full extent of the most recent price increase, the organization is guessing that gas prices nationally will top out at $2.75 this summer.
A high of $2.75 would be good news for tourism in Vermont, according to AAA's Williams. He believes $2.75 gas would not be "prohibitive" and is not likely to keep people from driving the way $4 per gallon gas did.
"AAA believes gas prices are not going to be a significant reason for people not to travel, which it was last summer," said Williams.
Memorial Day travel this year also was up around the nation compared to last year, which is another good sign, said Williams.
"That spells good things for Vermont as far as tourism is concerned," he said.
One reason the average price of gas in Vermont is lower than the national average is because Vermont uses only conventional gas, while many urban areas are required to use "boutique blends" of gas in the summer to reduce pollution, said Williams.
During the winter, the Vermont average is closer to the national average, said Williams.
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To find the lowest reported gasoline prices in your area – or to report gas prices somewhere in Vermont – visit www.vermontgasprices.com. The Web site listed the lowest price reported at $2.43 per gallon at a station in Lydonville; the highest price reported was $2.76 at a station in Barton.
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