Gas prices jump nationwide

By ALEX STRICKLAND

Bigfork Eagle

Gas prices are marching toward $4 per gallon and things don't look to turn around anytime soon, if ever, according to a Montana AAA spokesperson.

Denise Harris, with Montana AAA, said the price of regular unleaded in Montana could hit $4 a gallon by spring, if not much sooner.

Gas prices in Montana swing with national and global trends, she said, even though our reaction to the market tends to lag.

"We're landlocked and a small market," she said. "It takes us longer to react going up or down.

"We didn't go all the way down last time and it caught us back on the upswing."

Harris said that perhaps the biggest sticker shock for consumers won't be at the pump, but rather in the grocery store or the restaurant. Though gas has risen quickly, the price of diesel — which is more closely tied to heating oil production — has jumped even farther.

"Bread is around two bucks a loaf, milk at four bucks a gallon," she said. "The trucking industry can't do anything."

Gregg Davis, the director of the Center for Business and Information Research at Flathead Valley Community College, said the rising costs are pinching pennies from local economies.

Davis did some "back of the napkin" figuring and deduced that the average family in the Flathead Valley is already spending more than they should on fuel.

The average household income in Flathead County is about $46,000 per year and Davis backed out federal taxes only — about 25 percent — leaving about $35,000 in disposable income. The Consumer Price Index indicated that people should be spending about four percent of their income on fuel each year — about $1,400 for the average family here.

If the average Montanan puts 15,000 miles on their vehicle each year and averages 20 miles per gallon (no SUV's here) that's 750 gallons each year. At $3 a gallon — wishful thinking these days — that's $2,250 on gas. At $4 a gallon it's $3,000, more than double the recommended amount.

"The bottom line is that rising gas prices are a tax on the local economy," Davis said. "Every nickel spent on gas is a nickel not spent at Sportsman's Ski Haus, education and investments."

Davis also said that Montanans feel the effects strongly because of the large distances traveled on a regular basis.

Both Davis and Harris cited uncertainty on a global scale as a contributor to rising prices along with the continued emergence of fossil fuel consumers China and India, where billions of people are beginning to use oil. Unrest in the Middle East and places like the Congo and Nigeria where large amounts of oil are produced also contribute to rising prices.

Harris said that even if there was an increase in the supply of oil worldwide, it might not make much of a difference because refining capacity is very limited in the U.S. In fact, she said, prices could take another jump as refineries could be forced to switch to produce heating oil in the coming months to fill an unusually low supply.

"This is probably just going to keep going for a while," Davis said. "The Northeast hasn't even begun to heat its homes yet."

Because gasoline is a feedstock, Davis said, it affects nearly every sector of the economy when prices rise or fall, especially in the short run.

"We're stuck with what we drive," he said. "I'm driving a pickup and what can I do? Nothing. I dig deeper in my pocket."

Davis recalled the oil crisis of the late '70s and early '80s and how Americans made changes after a while by abandoning the "Big Three" automakers in favor of smaller, more fuel efficient cars like Hondas and Nissans.

"Eventually people do make changes," he said. "But it was easier to dig in in the '80s; our houses leaked like sieves and nobody could tell you how many miles per gallon they got because gas was so cheap."

Davis said one good side of the price increase is that it could drive changes and make finding sources of alternative energy economically attractive.

"Every president since the late 1960s had a platform for energy independence and we're no closer now," he said. "It's going to take some lifestyle adjustments."