Tuesday, August 9, 2005

Gas costs skyrocket at Metro pumps

Crude oil costs push prices past $2.50 per gallon at some locations, shocking weary drivers.

By Nick Bunkley / The Detroit News

Charles V. Tines / The Detroit News Soaring gas prices are reflected in the sign at an Amoco on Woodward Avenue in Birmingham. Metro Detroit's average price was $2.368 per gallon Monday. Gambling on gas prices Several online sports books have a betting line on the price of gas. Among them: BogDog Sportsbook Pinnacle Sports Money per gallon You’re paying about 47 cents per gallon more at the pump now than at this time last year. How high do you think the price for regular gas will go in the next 12 months? $2.60 $2.80 $3.00 $3.20 $3.40 Higher yet Get results and comments Comment on this story Send this story to a friend Get Home Delivery

And you complained about how much gas cost last week.

Pump prices at many Metro Detroit gas stations surged past $2.50 a gallon Monday as crude oil futures hit a record near $64 a barrel.

"I'm having a heart attack -- $2.55?" said Royal Oak's Hugh Brennan, who didn't notice the sign outside a Speedway station in Oak Park until after he pulled in to fill up. "It's shocking."

The average price in Metro Detroit for self-serve regular gasoline was $2.368 Monday, an increase of nearly 12 cents from last week and almost 3 cents above the previous all-time high set in July.

Drivers are paying about 47 cents more a gallon than a year ago, making a 15-gallon fill-up cost an extra $7. Statewide, the average was $2.392

But Monday's averages, as reported by AAA Michigan, were calculated before the midmorning price hike that made 36-year-old Glen Head and other drivers kick themselves for not filling up Sunday night.

"Last night, right down the road it was $2.29," said Head, who paid $2.40 a gallon Monday at a Shell station on the corner of 11 Mile and Dequindre. "I was one day too late."

His only consolation was that gas was even more expensive directly across the street. At the same intersection, a BP station was charging $2.46, and a Rich station advertised $2.56. There were no cars at either one.

Inside the BP, owner Nadhim Mati lamented the lack of customers but said he couldn't afford to go any lower based on the wholesale price he had paid.

"They're losing money," Mati said, pointing to his lower-priced competitors. "I don't know how they can make it."

Station owners say they're not the ones responsible for prices climbing higher; many dealers' income has decreased as they trim their margins to stay competitive. Meanwhile, profits for oil refiners and producers are soaring, and analysts say prices aren't likely to fall unless demand drops or global economic growth slows.

"The biggest factor right now is the booming economies here and abroad," said AAA Michigan spokesman Jim Rink, "As long as those economies continue to do well, energy prices will remain high -- and volatile."

Oil and gas price experts said consumers shouldn't expect relief after Labor Day, when children are back in school and the number of vacationers declines. Some say oil could reach $70 a barrel this fall before receding in the winter.

"Demand is nowhere near as lumpy and as uneven as it was a decade ago," said senior analyst Tom Kloza of the Oil Price Information Service in New Jersey. "We use 'summer levels' on a 12-month basis now."

Light, sweet crude oil for September delivery settled at $63.90 a barrel Monday on the New York Mercantile Exchange, the highest since trading began in 1983. Traders attributed the day's rally to security concerns in Saudi Arabia -- where the U.S. Embassy and consulates have been closed -- rebel attacks on oil pipelines in eastern India and a string of U.S. refinery disruptions.

Also on Monday, President Bush signed a sweeping energy bill that will give $14.5 billion in tax breaks to energy companies and encourage development of alternative fuel sources, and lengthen Daylight Saving Time by one month. But experts said the bill won't affect oil and gas prices.

That frustrates retiree Isidore Knox of Grosse Pointe Park, who paid about $25 Monday to put a half-tank of gas in his Mercury Mountaineer. Knox first stopped at a station charging $2.48 a gallon, left when he saw the price, and found a Sunoco nearby charging 8 cents less.

"This is ridiculous," he said. "It's all George Bush's fault."

There is one new way for frustrated drivers to possibly recoup some of the money they're shelling out at the gas pump this summer.

PinnacleSports.com, an online betting site, is now taking wagers on whether the nationwide average price of gas will reach $2.50 a gallon by the end of the year or if the average in either New York or Los Angeles will reach $3. On Monday, pump prices averaged $2.339 nationally, $2.611 in New York and $2.642 in Los Angeles.

You can reach Nick Bunkley at (313) 222-2293 or nbunkley@detnews.com.