By M. Scott Carter
The Moore American
OKLAHOMA CITY
May 07, 2008 10:03 am
—
Cheryl Lowry spends most of her time in the van.
A working mother of four, Lowry drives “several hundred miles” each week as part of her job. She travels all over the metro area, including trips to Chickasha, Yukon or downtown Oklahoma City.
And that’s just for work.
Figure in football practice and the games for her youngest son, the weekly trip to and from the grocery store for the family and those trips when she’s “taking the girls where they need to go” and it’s obvious most of Lowry’s time is spent behind the wheel.
The problem is, it’s getting more expensive.
Much more expensive.
With gas prices hitting record levels in Oklahoma — and across the rest of the nation — Lowry, like thousands of others, now finds herself trying to balance the ever-increasing cost of fuel against skyrocketing food prices.
And things are getting worse.
“We don’t eat out a lot,” she said. “And we don’t do many extra events, it’s just too expensive.”
Today, her trips to the grocery store — not including the cost of getting there — are painful.
“You can definitely tell that the price of gas has affected everything,” she said. “I shop every week and the food prices have all gone up tremendously — on almost everything.”
Those prices, she said, didn’t just increase by “a little bit” but instead, have jumped by large margins. “Overall, food has gone up a lot. It takes much more effort to just plan a few different meals. And now, dinner is much more expensive to make. We work hard on our grocery budget. But, now, it’s hard to eat the same things you’re used to, when prices have gone up. We don’t even purchase the occasional treat any more.”
Blame high gas prices.
As the cost of fuel increases, the cost of trucking food to stores across the country also has increased. Those higher costs are pushed onto the consumer.
Then, there’s the corn issue.
With more and more corn being taken out of the food chain and used to make fuel, the cost of corn-based foods and those foods which use corn in their production (think eggs, milk and beef) also have seen staggering price hikes.
The result is simple: Rising gas prices are spreading throughout the economy inflating other areas.
And for Lowry, those price increases also are forcing her family to cut back on visits and quality time with loved ones.
“We have family in Lawton. But, now, we’re limiting those visits. We used to go down there quite a bit in the summer. Now, it’s not something that’s going to happen very often.”
The story is similar across the country.
With prices for regular unleaded gasoline hovering around the $3.40 mark in the Norman area, many families are limiting trips, trading in larger vehicles for smaller ones, or reducing their household budgets — including what they spend on food — in an effort to make ends meet.
Still, for Lowry, the fact that her husband’s employer furnishes his vehicle makes “a huge difference” for her family.
“We’re doing OK,” she said. “But the only reason we are is because my husband’s company supplies the vehicle. There’s not a second person in the family spending gas money.”
Without that, Lowry said, her budget “would be almost impossible” because she would be forced to spend close to a week’s salary on gas.
“It’s scary,” she said. “I heard the other day that gas prices were going to hit the $6 per gallon range by end of summer. If that happens I don’t know what we’d do. I’d have to find a job working that would let me work out of my house if it (gas) goes any higher.”
Lowry’s fears, though, may be unfounded.
While a few analysts have predicted gas prices in the range of $6 to $7 per gallon this fall, at least one Oklahoma expert believes the worst of the gas price increases is over — for a while.
Chuck Mai, a spokesman for AAA of Oklahoma, said the country’s gas price rollercoaster “may be starting back down.”
“I’m not at all sure that we haven’t reached the top of the mountain,” Mai said. “So far, this year, I haven’t heard of any fires, lightning strikes or anything that could cause the price to jump. And the refining industry is making the transition from winter-grade fuels to summer-grade fuels smoothly.”
While Mai is hesitant to predict if prices will ever drop below $3 per gallon again, he does expect prices to drop some, then stabilize for a while.
“The lion’s share of the prices increases may be over,” he said. “At least until the next bad headline. You really wake up to a new day in what sets the price of gasoline.”
And for Mai, the fact that more refineries are coming on-line and the country hasn’t seen major weather problems, are all positives.
With more production coming on-line and the dollar getting stronger, we should see the price of fuel decrease, he said.
“Problems in Middle East, labor action disruptions in Nigera, weather in the Gulf, any number of things can all impact the price of fuel. Anything can effect the price of gas.”
Those issues, plus speculation in the crude oil futures market have all conspired to push the price of crude oil to record highs.
But other price increases, Mai said, are not so easily explained.
On any given day, the price for a gallon of unleaded can jump several cents; this, despite the fact that the gas being pumped was purchased by the retailer for a set price several days before.
Those price increases, Mai said, are much harder for consumers to understand.
“It’s a very good question,” he said. “And its hard to answer. While I haven’t been privileged to those conversations around the mahogany table, I’ve been told that some wholesalers and retailers view it like this: When prices are falling, stations will charge what they say is the price they paid for that fuel. When prices are rising, those same stations say they are changing a price which, they say, reflects what they expect to have to pay to replace the fuel they are selling.”
And, because there is little regulation of fuel prices, the price of gasoline reflects “what the market will bear,” Mai said.
The end result — gas at $3.45 per gallon.
But even at that level, gas prices in Oklahoma are cheaper than in most of the country.
Mai says this is due to three reasons: a low state gasoline tax; a high level of retail competition and Oklahoma’s location and connection to crude oil producers and refiners.
“We have a very low state gas tax,” Mai said. “At 17 cents per gallon it’s one of the lowest in the country. And, we also have a very high level of competition. In Oklahoma, we have more outlets selling fuel per capita than just about any other place in the country. And, finally, we have many retailers and wholesalers who are based here, such as Loves, QuickTrip, companies like that. Add that to factors like being able to pump oil from anywhere in the world to Cushing, the result is lower prices than the rest of the country.”
Of course, you’d have to convince Cheryl Lowry of that.
“I’m still driving my 1999 van,” she said. “Because I can’t deal with the up-front costs of a new one. And now, I’ve become very conscious of high gas prices. I didn’t use to, but with the amount of gas I’m using, I have to pay close attention. For me, $3.40 isn’t cheap.”
Mai said he understands why Lowry and other consumers are focused on the price of gasoline.
“It’s become a big issue,” he said. “In this day and age, the two big topics of conversation are the weather and gas prices.”
And while Mai said many stories about the oil and gas industry present “the doom and gloom,” he believes that soon, consumers will get to see some price relief.
“We’ve really created a new level for the price of oil,” he said. “I doubt if you’ll see crude oil drop below $70 per barrel again, and if it gets down to $80 or $85 I would be surprised. But prices in the $90 to $95 range wouldn’t be that strange.”
But until the price falls, Mai encouraged drivers to take steps to conserve fuel.
“I think more people are definitely going to try and conserve gas,” he said. “And there are several ways to do that.”
Mai said improved vehicle maintenance, and changes in driving style and speed can all help the average driver reduce their fuel usage.
“Take speeding,” he said. “The amount of fuel you consume rises exponentially after 55 miles-per-hour. And, if you replace your dirty air filter with a clean one, you can improve your mileage by 10 percent.”
The savings in fuel can “do a lot” to stretch those fuel dollars, he said.
“People are paying attention. They’re taking better care of their vehicles and they are changing their driving habits. When you get prices at $3.40 per gallon, that’s an attention grabber.”
Cheryl Lowry would agree.
But she’d also tell you that gas at $3.40 per gallon is attention she could do without.
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