Gas prices rising without demand to back

Published 11:00 pm Monday, February 27, 2012

Gas prices have been on the steady rise, and there’s really no demand to back up the increase of what consumers are paying at the pump, according to analysts.

“It’s very strange because, normally, our prices are tied so tight to our demand,” said Clay Ingram, spokesperson for AAA Alabama. “Our demand is at a 10-year low right now, but our prices are climbing like crazy.”

The state average on Monday was $3.58, according to Ingram, who noted that number was up 26 cents from a month ago and 30 cents from a year ago.

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In Troy, the lowest price that showed up on Monday morning was $3.51 at the Kangaroo on U.S. Hwy 231. In the afternoon, the Citgo at 1647 U.S. Hwy. 231 took honors of having the lowest price at $3.48. The most expensive in town was $3.65.

While the U.S. demand for gasoline is at a low, Ingram said global demand that includes countries that have traditionally not used much gasoline, could be causing a bit of an increase. But there are other factors.

“We can blame part of the increase on investors and speculators around the world who are keeping crude oil prices artificially inflated,” Ingram said.

Benchmark crude oil fell slightly by $1.21 to end the day at just more than $108 per barrel in New York, but retail gasoline prices continued to climb by five cents nationally to make the U.S. average $3.70 per gallon.

And the added price of gas going in the tank will soon be leading to an increase of products consumers purchase off of store shelves.

Although Johnny Garrett, owner of Piggly Wiggly on North Three Notch Street in Troy, said he expects to see grocery prices go up any day now.

“In the grocery business, a big part of the price is freight,” Garrett explained. “Fuel prices are definitely tied to the cost of food in a local store.”

While there might not be a significant increase on dry goods that are stockpiled in warehouses, immediate price increases are usually noticeable for produce items that need to be transported in a more timely fashion.

While consumers aren’t setting the price at the pumps, being diligent in comparative gas shopping will save money in the long run and force companies to compete for business, according to Ingram.

“We haven’t been price shopping,” Ingram said. “The message we should be sending to big oil companies is, ‘Yes, we have to have gas, but we do care how much it costs and we are going to buy the cheapest gas we can find, everyday.’ ”

Ingram said, in order to effectively drive prices down, customers must compare prices and choose the lower number every time they need to fill up.

“It could really have a tremendous impact,” Ingram said. “These big oil companies can lower prices and still make money.”