ESCANABA - Most watch with dread as the digits on gas station displays rise - and with good reason. Over the holiday season, a notable boost in the economy aided the prices of oil, which eventually led gas prices to rise over $3 for consumers locally and nationwide.
Now, the traditional holiday spending hangover has seemingly bypassed many Americans, who continue to spend their way into what some experts see as a rejuvenated economy. However, this positive economic outlook is leading to predictions of even higher gas prices well into the summer of 2011.
Locally, prices have been steady at over $3 per gallon for weeks - reaching nearly $3.20 at some points.
The price of gas locally has climbed over $3 — a 40 cent increase over last year.
Escanaba resident Rob Mitchell says the increase in gas prices have had a negative effect on his travel time - forcing him to put even more money into his gas tank.
"I don't like it," he said. "My wife and I have two kids that are involved in everything, so we have a truck that never turns off."
Mitchell, who has been listening to the latest predictions about gas prices, agrees this summer will likely pose a problem if increases become a mainstay.
Escanaba High School student Megan Thomma pumps gas Wednesday at the Holiday Stationstore in Escanaba. (Daily Press photo by Ashley Hoholik)
"Summer's coming - the camping and whatever else - it's going to cost a lot of money," he said. "A lot of people who want to do things aren't going to."
According to the U.S. Energy Information Administration (EIA), gas prices are created based on four variables: taxes, distribution and marketing, refining, and crude oil. In Nov. 2010, the EIA reported the gas price was based on approximately 71 percent crude oil, 5 percent refining, 10 percent distribution and marketing, and 14 percent taxes.
This gas price compilation differs from that of the past decade, when the EIA put crude oil impact at anywhere from 51 to 61 percent of the entire price make-up.
With crude oil pricing having such a predominant effect on gas pricing, the 2010 year-end spending spree, which prompted spikes in the per barrel cost of oil, only led to a financial burden at the pump.
By the end of 2010, oil prices were approximately $91 per barrel, up around $11 per barrel from 2009, but similar to prices in 2008 and 2007, when the Great Recession had not yet hit.
On Wednesday, crude oil prices had lowered again to around $88 per barrel, but the gas prices will likely remain stagnant, according to the EIA. In fact, nationwide averages put gas prices at $3.07 per gallon Jan. 3, an approximately 40 cent increase over last year.
In the administration's Short Term Energy Outlook, released on Dec. 7, 2010, they predict the U.S. gross domestic product (GDP) will rise by at least 2 percent this year - the per gallon gas price growing with it.
Escanaba High School student Megan Thomma, who has a paper route outside of school for extra money, pays for her gas and isn't welcoming the newest increases.
"The prices are kind of high," she said. "I put in like $20 a week."
The EIA also predicts that the increased consumption of liquid fuels from non-Organization of the Petroleum Exporting Countries (OPEC), 2 million barrels per day in 2010, will lead to more demand for OPEC crude oil production and a decline in global oil inventories.
"In 2011, higher crude oil prices combined with higher refiner margins push annual average prices for motor gasoline and diesel fuel to $3 and $3.23 per gallon, respectively," the report stated.
According to Mitchell, the price of crude oil should be more than enough to spur action from the political realm. "Politicians should be involved...in this," he said. "It's up here - why not take action?"