$5 Gas Coming Soon to a Station Near You

American motorists have seen the national average for a gallon of regular gasoline rise above $3.50 a gallon on just three occasions, but it has never happened this early in the year. Analysts say it’s likely a sign that pain at the pump will rise to some of the highest levels ever seen later this year. In 2008, average gasoline prices had hit inflation-adjusted records nationally by the summer, but they didn’t climb above $3.50 a gallon across the U.S. that year until April 21, according to the AAA Fuel Gauge Report. It happened again last year, but not until March 6. But $3.50 a gallon gasoline is already here in 2012, weeks before refineries typically shut down for springtime maintenance, and weeks before the states switch from their less expensive winter blends of gasoline to more complicated and pricier summer blends. [Source]

Gas prices’ Earliest-ever Rise Above $3.50 a Bad Sign for Motorists

Gas prices up 8% in 2012, fastest gain in history!

February 14, 2012

The Morning Call - Kirsten Pinnock monitored closely the dial on the Allentown Sunoco gas pump. She only wanted $12.50, not a penny more. That would bring the fuel gauge on her car up to the halfway mark.

Why not fill it up?

"I don't have enough money," the 18-year-old Allentown resident said Tuesday with an apologetic smile. "It's not payday yet."

Across the country, motorists are watching with concern as fuel costs tick ever higher. The national average for a gallon of regular gasoline has risen above $3.50 a gallon on just three occasions, but it has never happened this early in the year. Analysts say it's likely a sign that motorists could be paying some of the highest prices ever this year.

At the moment, the national average stands at $3.51, up from $3.48 a week ago, according to an AAA report, which gets its figures from prices compiled by the Oil Price Information Service.

The average in Pennsylvania is even higher: $3.63. According to GasBuddy.com, the cheapest gas in the Allentown area as of Tuesday was $3.49, at USA Gas on Tilghman St.

"This definitely sets the stage, potentially, for much higher prices later this year," said Brian L. Milne, refined fuels editor for Telvent DTN, a commodity information services firm. "There's a chance that the U.S. average tops $4 a gallon by June, with some parts of the country approaching $5 a gallon."

In 2008, average gasoline prices had hit inflation-adjusted records nationally by the summer, but they didn't climb above $3.50 a gallon across the U.S. that year until April 21, according to the AAA Fuel Gauge Report. It happened again last year, but not until March 6.

But $3.50 a gallon gasoline is already here in 2012, weeks before refineries typically shut down for springtime maintenance, and weeks before the states switch from their less expensive winter blends of gasoline to more complicated and pricier summer blends.

To fill a Chevy van's tank at the Allentown Sunoco on Hamilton Street, Randy Beidlman of Salisbury Township spent $99.

"They're making money hand over fist," he said of the oil companies that produce gasoline. "It's price gouging."

There are plenty of reasons for the high prices, and lots of reasons to fear a big price spike in the spring, said Tom Kloza, chief oil analyst for the Oil Price Information Service.

"Early February crude oil prices are higher than they've ever been on similar calendar dates through the years, and the price of crude sets the standard for gasoline prices," Kloza said. "We've lost a number of refineries in the last six months [to permanent closure]. Some of those refineries represented the key to a smooth spring transition from winter-to-spring gasoline."

Some cities, like Los Angeles and New York, are already closing in on $4 a gallon, said Patrick DeHaan, senior petroleum analyst for GasBuddy.com.

The current national average is 38.3 cents a gallon higher than the old record for Feb. 13, which was set last year.

The impact of rising prices is already rippling throughout the Lehigh Valley. The car-buying market, for example, is seeing more interest in smaller vehicles, according to some dealership owners.

"We have seen a pullback on the V-8 for the V-6 engines," said Fred Rentschler, owner of Rentschler Chrysler, Jeep, Dodge in Slatington.

The smaller vehicle boon coincides with a recent report by the National Automobile Dealers Association, predicting that when gas prices jump this year dealerships can expect a boost in sales of smaller and alternative fuel vehicles.

In general, higher gas prices can hurt businesses that rely on discretionary spending because people paying more to fill gas tanks have less money for other things.

On the other hand, high gas prices in recent years have not hurt the Lehigh Valley's growing tourism industry, thanks to the region's proximity to large populations in the Mid-Atlantic region, said Michael Stershic, president of the tourism group Discover Lehigh Valley.

"People will invest in a tank of gas to come to the Valley for a weekend and do something here rather than multiple tanks of gas to go somewhere farther away," Stershic said. "It's not a deterrent at all."

In December, there were more than 30,000 jobs in the local tourism industry, accounting for nearly 10 percent of all jobs in the region, according to the state Department of Labor and Industry.

Concerts at ArtsQuest's new SteelStax venue in south Bethlehem and a new events center scheduled to open in May at Sands Casino Resort Bethlehem will help solidify the Valley as a destination for tourists from New York, New Jersey, Connecticut, Maryland and Washington, D.C., Stershic said.

Of course, higher gas prices will mean those people will have that much less money to spend.

For Andrew Traud of Allentown, who spent $48 to fill his gas tank at Sal's Citgo on Tilghman Streeet in Allentown, the best coping mechanism is resignation.

"Just got to deal with it," he said, shrugging his shoulders. "What are you going to do?"

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