Gas Prices Skyrocket: July’s Jump Was Highest Since 2000
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Justin Sullivan/Getty Images(NEW YORK) — Gas prices in July didn’t just jump. They qualified for the Olympics.
According to AAA, July’s increase was the biggest since 2000. As of July 31, the average national price for regular hit $3.50, up from $3.32 the month before. Today’s average price is $3.52.
High as July’s prices were, they were still below April’s, when gas was selling for $3.94.
Andrew Lipow of Lipow Oil Associates in Houston says gas prices have simply tracked the price of crude, which has been on the rise for the past four weeks. Meanwhile, inventories remain low, compared to last year’s levels. Says Lipow, “We saw an increase in the demand for gas, year-on-year, in April and in May, as the public seemed to be accommodating higher prices.”
A nationwide drought is behind four to five cents of the increase, according to AAA. That has raised the price of corn-derived ethanol, which by law must be added to gas sold in the U.S. The corn withered in July, ethanol prices rose 17 percent. Ranchers are lobbying for a one-year easing of the rule.
Right now the lowest prices in the nation can be found in Alabama, Mississippi, and South Carolina. Local regulations, says Lipow, permit these states to use a simpler, less costly formulation of gas than the formulations sold in Chicago, New York, Los Angeles and major metro areas. Southern drivers also benefit from lower motor fuel taxes.
But what can motorists expect to pay in August? Higher prices, naturally.
“Drivers can expect to see a steady rise of 5 to 10 cents a gallon nationwide, especially as we move into the height of the hurricane season,” Lipow predicts. “Supplies could be threatened, if a significant storm were to enter the refining areas of the Gulf.”
Copyright 2012 ABC News Radio