Rising Gasoline Prices
March 2011
Gasoline prices are rising in Dacula. At the time I wrote this article, premium gasoline was nearly $3.40 per gallon and rising, however in the last few days it has come down about 19 cents to $3.20 per gallon. Where are gasoline prices headed. The general consensus of economists is higher still. Some are projecting gasoline will be around $5 per gallon by the end of 2011.
The fragile, beginning recovery from the depression of 2008-2010 is likely to be derailed before it can get much traction because, in part, of rising fuel prices. World markets and globalization affect Dacula citizens most directly at the gasoline pump. As China’s economic development surges ahead, the demand for gasoline and fuel in China causes prices world-wide to rise, since the supply of refined gasoline and other fuels has not increased. The United States has not built a new refinery since the early 1970’s.
The costs of fuels drive the increasing costs of all items that must be transported from manufacture to the ultimate consumer, you and me. Will these inflationary costs derail our economic recovery?
What effect will rising fuel prices have on local businesses? The United States uses about 140 billion gallons of gasoline each year, and of that, Georgians use about 5 billion gallons of gasoline per year. Each rise of $10 per barrel of crude oil results in a cost increase of about 25 cents per gallon at the pumps. So for Georgians, a $10 per barrel price increase for oil translates into a cost to Georgia consumers of $1.25 billion per year.
The average Dacula consumer currently spends an extra $35 per week for fuel at the current price of crude oil. At a price of $3.75 per gallon, the consumer will need an extra $55 per week for fuel. Such an increase will force people to prioritize spending. Will local businesses be affected? Yes, they will.
While these issues are global in nature, what can the average Dacula Joe do? Our car manufacturers are working hard to provide higher mileage and alternatively-fueled automobiles such as hybrid electric, all electric and hydrogen fueled cars. While these efforts will eventually reduce the demand for gasoline in America, they are still a long-way out in the future in sufficient numbers to make much of a difference. So as always, the major players in this drama are you and me. We will be asked to conserve, to carpool, to use public transportation, and to combine trips.
The choices we make will be painful. These choices start with you and me—right here locally. I believe we will make the right decisions. Others all across the globe, in their own locations, will also make the right choices. Hopefully, we still will be able to enjoy our personal, private vehicles in the future.