Colorado, like the rest of the nation, is experiencing some serious gas pains this summer.
The price of a gallon of gas is still less than a 12-ounce latte at a Denver coffeehouse, but at $2.40, $2.50, $2.60 a gallon and climbing, Coloradans are feeling the squeeze on their pocketbooks.
The price jumped 20 cents a gallon this past week and seems headed toward $3, forcing motorists to bargain shop or contemplate other modes of transportation, perhaps checking an RTD bus timetable or even dusting off the bicycle.
Higher gas prices might be easier to stomach if the state of Colorado was getting something in return, such as more money for federal highways. After all, roughly 27 percent of what we pay per gallon goes to state and federal taxes. Colorado will recover 92 cents on each gas tax dollar sent to Washington under the $286 billion highway bill approved by Congress last week.
While motorists are left scrimping for pennies to fill our tanks, oil companies and overseas producers reap the rewards. The Washington Post reports that exports will earn Saudi Arabia $150 billion this year, up from $34 billion in 1998.
Nationally, gas prices are about 65 cents higher per gallon than they were in 2004.
The higher prices beg some fundamental questions about the mobile U.S. lifestyle:
At what price do we abandon our gas-guzzling SUVs for fuel-conscious hybrids, which get from 30 to 50 miles to the gallon?
Or, do we just shake our fists at the rising prices and rein in spending elsewhere? (Or worse, rack up more credit-card debt?)
Wal-Mart, the nation’s leading retailer, last week blamed its worst quarterly report in four years on Americans spending less at the store because they’re spending more at the pump.
When gas topped $2 a gallon in 2004, analysts figured it would bring a seismic shift in how Americans got around. But everyone kept on truckin’. When sales of huge SUVs began to dip this year, partly because of rising gas prices, automakers offered discounts and Americans snapped them up.
“Three dollars is the new two dollars,” AAA spokesman Mantill Williams was quoted as saying this past week. “Before, the prevailing wisdom was that once it reached $2 a gallon, people would dramatically alter their behavior … . But what we found is that didn’t turn out to be the case.”
National security strategists sputter at the nation’s strategic dependency on oil producers like Saudi Arabia, Iran and Venezuela and hope the rising cost of fuel will prompt more Americans to search out fuel-efficient vehicles.
But, it isn’t only SUV owners who are living in a state of denial. In pushing for the new energy bill that he signed recently, President Bush could have sought provisions to require stricter fuel-efficiency standards, but he didn’t.
The federal government in the 1970s created standards that require cars to get better gas mileage than vehicles considered “light trucks.” Back then, there were very few light trucks on the roads, but today’s SUVs and minivans fall under that category. Plus, giant SUVs, such as Hummers and Ford Excursions, are exempt from all fuel regulations.
In 2003, the Bush administration indicated it would extend rules to the big gas guzzlers, but it was reported last week that those plans have been shelved.
It’s a troubling development, as was the fact that Congress didn’t force manufacturers to improve average automobile fuel economy.
For now, with higher gas prices seemingly here to stay, many motorists are asking, why are prices so high?
It’s easy and tempting to blame OPEC or Exxon Mobil and its sisters, but the experts are citing the supply and demand theory from your high school economics class.
Oil prices are skyrocketing as demand increases faster than supply. A barrel of oil is at $66 – an all-time high. In 2002, it was $24. Oil makes up half the price of gas, and higher oil prices have been attributed to America’s continuing thirst for fossil fuels and increased industrialization in China and India.
Oil companies, however, are pocketing a pretty penny.
Exxon Mobil Corp., BP PLC and Royal Dutch Shell PLC, three of the world’s largest oil companies, reported last week that second-quarter profits rose by about one-third, pumped up by those higher prices and increased consumption worldwide.
Exon pocketed more than $7 billion in profits, while Royal Dutch took in about $5 billion. BP’s net income increased 29 percent, or $5.59 billion.
Marathon Oil Corp. saw a 91 percent earning growth in the second quarter because of the skyrocketing energy prices.
Most analysts expect our gas pains to last beyond Labor Day, a time when prices traditionally drop.
Whether Americans will adjust their driving habits, and whether the administration will seek more stringent fuel standards, remains to be seen.
One other thing – if you’re looking for another reason to cut back driving and save a bit on your gas bill, take a look at your utility bill when cooler weather arrives. Xcel Energy is predicting a 25-30 percent hike in winter heating bills, $35 more than the average monthly bill last winter.
