Crude Rebounds, Cause of Price Hikes Questioned

Phoenix, Ariz., March 27, 2008 – Over the last week, motorists across the state and country have seen pump prices begin to stabilize, but unfortunately, that stabilization could be short lived. Arizona’s statewide average for regular unleaded gasoline is currently $3.239 per gallon, an increase of less than a penny from last week. Tucson drivers hold on to the state’s lowest fuel price at $3.137 per gallon, while Flagstaff drivers continue to pay the most to fill their tanks at $3.356 per gallon. Nationwide, the current average is $3.267, a drop of just over a penny from last week.

Last week’s retreat in crude prices reversed this week as a result of news reports that crude pipelines in Basra, where much of Iraq’s oil is located, have incurred damage as a result of violence in the war-torn country. Although the severity of the damage and estimated time of repair has not yet been revealed, crude surged to over $107 per barrel after reports of the pipeline damage surfaced. Also supporting crude’s price reversal, this week, the Department of Energy (DOE) reported lower than expected fuel inventories. However, it is important to note that the agency also reported a drop in refinery activity and current gasoline inventories are nine percent higher than year ago averages.

“Speculation has surfaced on whether refineries are cutting fuel production as a result of weak demand and/or to increase their profit margins,” said Linda Gorman, public affairs manager for AAA Arizona.  “However, the market is really all about crude right now, with high crude prices causing most of the gas spikes we’ve seen all winter and the start of the spring.  That being said, AAA strongly discourages any attempt by the industry to keep prices artificially high at the expense of consumers’ pocketbooks.” Continued Gorman, “At a time when consumers are paying record high gas prices amidst a battered economy, this would only add insult to injury.  This is yet another example of why AAA calls on congressional leaders and presidential candidates to develop a comprehensive energy plan that will curb our reliance on oil.”

The cheapest gasoline in the continental United States is in New Jersey, where unleaded regular is $3.045 per gallon. California drivers continue to pay the most for fuel in the country at $3.624 per gallon. Motorists can visit www.AAAAZ.com/news for the latest fuel price information and gas saving tips and go to www.AAA.com/fuelfinder to locate the station with the cheapest gas in their neighborhood or along their commute route.  They can also visit AAA’s Fuel Cost Calculator at www.fuelcostcalculator.com, which can help drivers plan out their fuel costs so they can budget their travel expenses in advance. AAA members who use their AAA Visa credit card can get a rebate of up to five percent on gasoline purchases made at the pump. Members can also flash their AAA membership card to save at over 100 of the auto club’s Show Your Card & Save partners.  

 **The BTU-adjusted price of E-85 is the nationwide average price of E-85 adjusted to reflect the lower energy content as expressed in British Thermal Units - and hence miles per gallon - available in a gallon of E-85 as compared to the same volume of conventional gasoline. The BTU-adjusted price calculated by OPIS and AAA is not an actual retail average price paid by consumers. It is calculated and displayed as part of AAA's Fuel Gauge Report because according to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because "flexible fuel" vehicles can operate on conventional fuel and E-85, the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.

AAA Arizona’s Weekly Fuel Gauge includes data from gasoline stations in every Arizona community. However, only major metropolitan areas are shown in the table above.  Local prices in some communities might be higher or lower than the averages shown here.

NOTE: AAA Fuel Gauge data may be used on a daily basis by news media Web sites, but should include attribution to AAA.