Gas prices stretching toward $4 a gallon

On Tuesday, gas was at $3.61 9/10 for regular unleaded gas and $3.91 9/10 for ultimate unleaded at a BP gas station in the 2200 block of N. Howard St.
On Tuesday, gas was at $3.61 9/10 for regular unleaded gas and $3.91 9/10 for ultimate unleaded at a BP gas station in the 2200 block of N. Howard St. (Amy Davis, Baltimore Sun)

"Gas prices are outrageous."

Catherine Bell, a 66-year-old Social Security Administration retiree, was not happy Tuesday as she filled up her Chrysler at a Howard Street BP Amoco gas station in Baltimore. "You'll see when you get to retirement and you're on a fixed income."

The Baltimore resident reflects the feeling of a lot of Maryland motorists.

Gasoline prices across the state and the nation are climbing fast, and motorists could see $4 a gallon at the pump in the coming months, fueled by demand in China and India and turmoil in the oil-rich Middle East, analysts say.

The average price of regular unleaded gasoline in Maryland this month was $3.56 a gallon — nearly 20 cents more than in January and far above the $1.91 average in February three years ago.

In Baltimore, the price averaged $3.59 last week, 50 cents more than a year ago, according to AAA Mid-Atlantic. Nationwide, the average was $3.56 last week, compared with $3.16 a year earlier, the travel services firm said.

Recent trends have petroleum industry experts predicting higher gasoline prices through June, when the national average could exceed $4 a gallon. The rise is being fueled by a blend of factors, analysts say.

Iran has threatened to cut off oil to Britain and France in retaliation for a possible oil embargo later this year, causing jitters this week in world oil markets.

Also, gasoline prices typically rise in the United States each year as refiners shut down and switch to a cleaner, but costlier, kind of gasoline for use in summer months.

A sharp and sustained spike in gasoline prices this spring could cause small-business owners to fret, families to drive less and take fewer vacations, and workers to push employers for telecommuting options, experts say.

"It really depends on how people perceive these gas prices; are they considered to be temporary or permanent?" said Daraius Irani, director of the Regional Economic Studies Institute at Towson University. "If it's a long-term event, people will take fewer trips to the Eastern Shore. Maybe they'll buy a higher-mileage car. You may see more telecommuting."

Gasoline prices have climbed faster past the $3.50 mark than in past years, leading experts to predict a potentially long spring and summer of prices above $4 a gallon.

"It's a fairly safe bet" that gasoline will top $4 a gallon this spring, said Ben Brockwell, director of data, pricing and information services for the Oil Price Information Service, which tracks worldwide petroleum prices.

It isn't the American motorist who is driving up prices, experts say, as U.S. demand for gasoline is at a 12-year low amid slow economic growth.

"The tenor of the market is shifting from U.S. demand being the driving factor to demand and growth in developing countries being the driving factor," Brockwell said.

China, Russia and India are gobbling up oil, as their economies grow and more people can afford cars, and as their governments invest in roads and highways, said Neil Gamson, an economist with theU.S. Department of Energy.

"There's a new paradigm," Gamson said of those developing nations. "You can't overlook the car-buying public. It's growing."

Meanwhile, U.S. demand is declining. Aside from slow economic growth, experts say, more U.S. motorists are driving new vehicles with better fuel efficiency, telecommuting has become more common and driving habits have changed after several years of $3 per gallon gasoline prices.

Cherise Batts, 27, of Towson spends less on gas since she bought a 2012 Ford Fusion. The car gets 23 miles per gallon in the city and 33 on the highway.

Her previous car was a 2005 Chevrolet Impala, which got 19 miles per gallon in city driving and 29 miles on the highway.

"That car ate up gas," said Batts as she pumped gasoline into her Ford on Howard Street.

Down Howard Street, at the Oak Street Station, L.T. Santiful complained about rising prices as he fueled a work van. The West Baltimore resident figures he spends about $100 a week putting gas in his own car because he does a lot of driving around the region.

"It goes up every other week, it seems like," said Santiful, who supervises workers who clean vehicles used by the Maryland Transit Administration.

For small businesses tied closely to transportation costs, higher gasoline prices get passed on to customers — or cut into profit margins.

Phil Kramer, president of Maryland Messaging Service Inc., a Baltimore-based courier service, said higher fuel costs could be passed along to customers, which include lawyers, accountants and medical providers.

"You have to push that off to your customers and they don't like it either," he said.