Gasoline Prices on the Rise Across So. Carolina and the Nation
Gasoline prices in The Times & Democrat (T&D) region are at near record-breaking levels, and a local distributor is scratching his head about the rising prices.
"It is the strangest market," Bamberg's Brabham Oil Company spokesman Brad McCully said Monday. "Technically speaking, it (rising gasoline prices) should not be happening."
A survey of 14 Orangeburg stations Monday morning revealed the lowest regular unleaded gasoline price was sold at the College Corner All American Gas, corner of Magnolia Street and S.C. Highway 33, and the Sunoco station on St. Matthews Road. The price for a gallon of regular unleaded self-serve gasoline was $1.769.
Prices in the city are averaging $1.789 a gallon. These prices are about 24 cents a gallon higher than prices a year ago.
McCully noted that from looking at gasoline and crude oil fundamentals, supplies appear better than last year.
So why the increase?
"I really think it is the large trading houses," McCully said. "All OPEC has to do is sneeze and say that the cartel will cut production, cut production. They start whispering that, and the trading houses start speculating prices will go up, and they start buying into that."
McCully also described the "price band," where OPEC members would automatically increase production if prices got too high and decrease if prices got too low.
The band has largely been ignored since it was put in place in March 2000.
"The price band is a joke," McCully said. "The greed factor kicks in, and as soon as it (cost of a barrel of crude oil) hits $49, they start saying, 'We will cut production'."
As to what the future may hold, McCully acknowledged that below-cost selling can't be sustained for long. But exactly what the future may hold for prices is unclear.
"Fundamentally, prices should not be going up at all," he said. "It is going against the fundamentals."
But by the looks of the recent quick spike in prices, McCully said many are leery that today's prices could be a foretaste of higher future prices.
"Normally, it does not spike this fast," he said. "It is a big game for these big players, and our economy takes a lick for it."
The rise in gasoline prices has brought up a new phenomenon: the increasing sales in hybrid vehicles.
Paul Whatley of Broughton Street's Whatley Toyota said the dealership has had a waiting list for the past 1-1/2 years on its hybrid Toyota Prius.
"The demand is very high," he said. "You have got a car getting 50 miles to a gallon. Toyota has upped production three times in the last 12 months to meet the demand. There is still a waiting list on them."
Whatley said he sees a direct link between the rising prices and the hybrid.
"When they came out in 2001, we sold hybrids to folks mainly concerned about the environment," he said. "But fuel prices have really driven the demand out on that vehicle. There is no doubt."
Whatley said the dealership will also have a 2005 Toyota Highlander Hybrid coming out in late spring.
"We are really getting a lot of phone calls," he said.
Hybrids draw power from two sources, typically a gas or diesel engine combined with an electric motor. The battery powering the electric motor carries as much as 500 volts, more than 40 times the strength of a standard battery.
Hybrid SUVs are touted as being 15 percent more fuel efficient on highways than their gasoline-only counterparts.
Orangeburg Superior Honda is currently selling hybrids in its Honda Accord and Honda Civic, but manager Alan Rhoad said the concept of the hybrid is still rather fresh and new in the minds of many.
"They are hard to come by," Rhoad said. "But we are selling a few. We have had a few calls on them."
Rhoad noted because of the gas mileage in a hybrid — 48 miles to the gallon in the city compared to about 38 miles to the gallon in the traditional gasoline-only model — consumers would have to expect to pay a higher price for the hybrids.
"So far it has not justified the difference ... but when gas gets to $3 a gallon, they may go with the hybrid," Rhoad said, laughing.
Statewide, the average gasoline price was $1.832, up 27 cents from this same time a year ago. Prices are still 15 cents below the national average, and Charleston reported the lowest average price for gasoline nationally at $1.76 a gallon.
Local trends followed those nationally.
Gasoline prices have increased in the past two weeks as the cost of crude oil has jumped. Two factors are cited as further driving up the price of gasoline.
The lowest-demand time of year has ended, and people will be driving more as spring and summer approach. In addition, supply will be tightened by the reformulation of gasoline required by law to reduce smog during warmer months.
The average retail price for all three grades of gasoline increased 6.71 cents to $2 per gallon between Feb. 19 and Mar. 4, said Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations across the country.
During the past two weeks, crude oil prices rose $5.43 to $53.78 per barrel. Lundberg said even higher prices can be expected at the pump.
"Gasoline prices are still lagging what has happened to crude oil," she said. "So more of the crude oil prices will be passed through to gasoline."
The highest average gas price in the nation for regular unleaded was $2.32 per gallon in Honolulu.
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