(U-WIRE) WASHINGTON – Drivers may have to dig deeper into the their pocketbooks as pump prices continue to rise. On Tuesday, Federal Reserve chairman Alan Greenspan said that oil and natural gas markets were under the heaviest strain in a generation, noting that higher oil prices had caused only modest reduction in consumer demand.
Currently, the average rate of a gallon of regular grade gasoline is priced just above $2.27, up 48 cents from last year. Last week saw a record in crude oil prices at a staggering $58.28 a barrel. And these numbers are likely to increase.
Around the country, motorists on the west coast are paying the most at about $2.46 a gallon, while drivers in New England states are spending the least, at just above $2.15 a gallon.
According to the New York Times, Greenspan said that gas prices are “notably higher” in the United States than in other countries because of limited systems to import natural gas from overseas. The U.S. economy also recently emerged from a recession and consumer spending has grown, adding to the daily demand for oil to feed America’s vast number of large, gas-hungry vehicles.
But Greenspan was optimistic about the long-term affect of higher energy prices, noting that it could lead to higher oil production and increased efforts to find new sources of energy.
“We must remember that the same price signals that are so critical for balancing energy supply and demand in the short run also signal profit opportunities for long-term supply expansion,” Greenspan said in a speech to oil refiners in San Antonio, Texas last week.
Many college students, already pinching pennies on strict budgets, are also feeling the strain of higher gas prices, with each trip to the pump costing more nearly every month. Bringing a car to school has become costly, and has forced some students to think more critically about their spending habits.
For 24-year-old student Hilari Jones, higher gas prices means forgoing a snack or a cup of coffee at the gas station to save money.
“Instead of getting a bag of chips or a Starbucks mocha, I put a few extra dollars in the car because the gas prices may jump tomorrow,” Jones says.
Much of the money she makes as a part time waitress at a local restaurant goes to filling her gas tank.
“Basically, a weekend’s worth of work equals gas and food money for that week,” says Jones.
Even though student Scott Johnson lives on campus and does not have to commute every day, paying for gas is still a big concern. He makes sure to keep his trips as short as possible to avoid wasting gas.
“If I have five different places to go, I will line my trip up so I don’t have to keep going all across town,” says Johnson. “I definitely think about where I am going before I get in my car and how I can make my trips shorter to save gas.”
Before buying his first new car, recent George Washington University graduate David Grossman researched to see which cars would require the least amount of gas. He eventually settled on buying the Toyota Acura CL.
“One of the considerations that went into buying a car was its fuel efficiency and the type of gas required,” Grossman says. “But because of the current prices, I plan to continue taking Metro to work Monday through Friday.”
The federal Energy Information Administration says that gas prices are expected to stay above $2 a gallon at least until next year, with prices peaking in the summer travel months. According to the New York Times, this is the first time the government agency has predicted that nationwide gas prices would remain above $2.
“As in 2004, the primary factor behind these price increases is crude oil costs,” the agency’s Website said. “Despite high prices, demand is expected to continue to rise due to the increasing number of drivers and vehicles, and increasing per-capita vehicle miles traveled.”
Congress last week drafted an energy bill in an effort to keep prices steady. This is the fifth year in a row that Congress has tried to pass the legislation that would increase oil and gas supplies while limiting consumer demand by promoting energy conservation. But if the bill is passed, it would have little or no effect this year’s prices.
As a graduate student at the University of Maryland, Josh Hiscock already pumps about $100 a month into his new Honda Civic.
“That money could be better used a lot of places,” Hiscock says.
Johnson, a junior at the University of Southern Mississippi, doubts that gas prices will go down anytime soon, noting that recurrent increases are now part of everyday life.
“I’m not happy with it at all but I’ve just accepted the fact that gas will keep going up,” Johnson says. “Luckily I can afford it now but it’s ridiculous. I don’t think it will ever go back down.”
Copyright c2005 U-WIRE via U-Wire