Arizona Gas Pricing Trends

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Arizona gas prices have risen dramatically since the start of the new year, but have slowed down. Michelle Donati of AAA Arizona will bring us up to date.

Ted Simons: Arizona gas prices are starting to level off after major increases to start the year. Here to help us make sense Of what's happening at the Pumps is Michelle Donati of AAA Arizona. Thank you for joining us.

Michelle Donati: Thank you for having me.

Ted Simons: Where are gas prices in Arizona?

Michelle Donati: Gas prices are high. They started to level off. Today statewide average is $3. 74 per gallon. That is about a penny less than what we were paying at this time last week. About 31cents more than we were paying this time last month. If you look at where we were -- what we were paying a year ago, it is actually not too far off from what we were paying this time last year.

Ted Simons: Isn't it somewhere 60, 70 cents since the start of the year --

It is, 3 1/2 months into the new year, and prices have risen 70 cents since January 1 st. We ended paying around $3.00 a gallon. Some places, Tucson especially, under that $3.00 mark. And prices took off after the first of the year.

Ted Simons: Do we know why?

Michelle Donati: Well, the main reason, last year, prices were, as I mentioned, prices were in the same range that we're paying right now this time last year but for a completely different reason. Last year, political tensions, issues in north Africa and the middle east causing oil prices to spike and showing up at the pump. This year really not a lot to do with oil prices either, but everything to do with refinery issues. Refineries made the switch to -- started the maintenance period earlier this year. That maintenance period takes place before we can make the switch to summer blends. When that maintenance period takes place, if anything is going to go wrong with the refinery, it is typically during that period. Arizona gets fuel from two different pipelines, one from the west and one from the east. Refineries on the east side had some issues that resulted in refinery shutdown. We had to get more supplies from the west which already starts at a high price. California gas prices, already driving at a higher price. The refinery we rely on to get supplies from the west line also had issues and forced a pinch in supplies. That is what has been behind the 70 cent surge we experienced this year.

Ted Simons: If crude prices were not really a factor, refinery maintenance -- if crude prices had been a factor, we could be really high.

Michelle Donati: We could be much higher than now, especially if there was any conflict in -- any type of geopolitical tension. The silver lining, prices have started to level off. And the other thing to consider is that as an automotive expert, AAA does believe that prices will peak earlier this year. Prices traditionally peak late spring, early summer. We believe because the maintenance period was bumped up this year, the prices will spike at a price that is lower than what we spiked last year.

Ted Simons: That is encouraging news. As far as the state is concerned, where do we rank as far as prices compared to other states?

Michelle Donati: We are all over the map. There were weeks back last year where we were one of the lowest paying states in the country. Currently we are paying a little more than average. About 33states paying less for fuel than Arizona. We have quite a wide range of -- there is quite a bit of disparity with prices, not only in Arizona, but also across the country. Arizona alone, Tucson, around $3.59. Scottsdale paying just about $3.90.

Ted Simons: Why the disparity?

Michelle Donati: A couple of different reasons. Typically flagstaff is one of the highest paying areas and it still is. There are certain times of the year when there is a shift and Scottsdale typically takes that higher price and it is usually around the time when we make the switch to summer blends. One of the reasons is that there are certain places in the state that actually do not use the summer blend. Metropolitan Phoenix does and certain areas across the state, but not others. So, that is one reason. And then another reason, especially with prices spiking so quickly here, is that some of the outlying areas, real places that are typically higher can hold on to supply longer than places such as Scottsdale, Phoenix, and Metro regions that burns through supply faster. When we see the fast increases, they typically show up in Metro markets faster than in the rural areas.

Ted Simons: Bottom line, start of the year high, kind of getting a little lower now, and we shouldn't see too much of a shock here as summer approaches and as summer hits.

Michelle Donati: Barring unforeseen circumstances. It is too soon to tell if we have peaked so far for this year. The next 30 days or so should be pretty telling. But, again, we do believe that prices will peak sooner this year, and that, you know, prices typically remain high during the summer. But we do believe that 2009 was the most expensive year on record for gasoline and we do not believe that 2013 will take over that record. But, again, that is barring unforeseen circumstances.

Ted Simons: We will take it and run with it. Good to have you here. Thank you for joining us.

Michelle Donati:AAA Arizona;

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