Up, Up and Away: Gas prices rise once again

TRAVERSE CITY -- Julie Strang was supposed to be at work early Tuesday afternoon, but thanks to her boss she was able to fill her gas tank before she took another hit in the pocketbook.

"I was at work and a lady came in and told us it was at $3.45 (a gallon)," Strang said. "My boss covered for me so I go could fill up ... I knew that come 4 o'clock, it was probably going to change."

Strang filled up at the Mutual Station along East Front Street, where gasoline was still at $3.269 per gallon, but most stations around town on Tuesday jacked prices to $3.459 per gallon in the wake of record high oil prices that threatened $110 a barrel in some trading markets.

Spiraling gas prices upset Strang, who's struggling to make ends meet while she labors at a fast food restaurant to support her family.

"You've got to hand it to these oil companies ... I think it's outrageous that they're trying to get away with this," the Traverse City woman said. "No wonder Michigan is in a recession."

Victor Barajas of Peshawbestown also pulled into Mutual for gas when he noticed prices spike around town.

Retail gas prices in the Traverse City area increased 16 to 20 cents per gallon in recent days as wholesale gasoline prices climbed on the heels of record crude oil prices.

But Steve Sutherland, a former gas and oil distributor who writes the bi-weekly "Gas Man" column for the Record-Eagle, said higher oil prices aren't the only reason for increased gas costs. Profit margins for gasoline at local stations increased from less than five cents a gallon last week to about 26 cents a gallon Tuesday, based on a retail price of $3.459 per gallon.

"Right now, it's just a game," Sutherland said. "(Oil companies) want the profits, and they're taking them."

Other cities are experiencing similar increases. According to Speedway's Web site, most of its 300-plus stations in Michigan were selling unleaded gasoline at $3.459 per gallon including outlets in Cadillac, Gaylord, Grayling, Lansing, Grand Rapids and Flint. Some stations, including one in Cheboygan, were selling at $3.349 per gallon and a handful were still at $3.299.

Linda Casey, communications manager for Marathon Petroleum Co. LLC in Findlay, Ohio, said gas prices are up throughout the Midwest this week based on escalating crude oil prices.

"It's a real simple answer: crude oil went up to about $110 a barrel and we just can't keep up with the increases," Casey said. "It's not something we like to do, but to stay in business we have to."

Gas prices at the pump rose overnight to a record national average of $3.2272 a gallon, according to AAA and the Oil Price Information Service. That's a tad higher than the previous record of $3.2265, set last May.

A year ago, rising demand and a string of refinery outages raised concerns about supplies. Now, the soaring price of crude oil is the culprit, propelling gas higher even though supplies are at 15-year highs.

On Tuesday, light sweet crude for April delivery surged to a new record of $109.72 on the New York Mercantile Exchange before retreating after the Energy Department and International Energy Agency cut crude consumption forecasts for this year. Afternoon trading fluctuated between gains and losses.

Where gas and oil go from here is anybody's guess. Many analysts expect prices to moderate, while others predict oil could keep rising to $120 a barrel, or higher. And with demand for gas expected to rise as warm weather arrives, analysts say pump prices could spike as high as $3.75 a gallon, regardless of what happens with oil prices. The Energy Department on Tuesday raised its forecast of how high prices will rise this spring by a dime to $3.50 a gallon.

Casey placed some of the blame for the escalating oil prices on growing speculation in the world crude oil market. Some analysts believe investors are using the oil markets as a hedge against the falling value of the U.S. dollar.

"I think a lot of it is speculation," she said. "Investors, banks, retirement funds -- they're buying (oil) futures, and it's driving the price up."

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Gas prices around Traverse City surged to over $3.45 after in the wake of record high oil prices that threatened $110 a barrel in some trading markets. Record-Eagle