Gas prices climb as summer travel season approaches

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Gas prices in Arizona approach a three-year high as they hit a $3.02 per gallon average on Wednesday, joining 13 other states who have reached the three dollar mark.

At this moment, 17 states in the country are seeing gas prices at or above three dollars. Motorists haven’t seen prices this high going into Memorial Day weekend since 2014. Arizona prices have been steadily rising since January, but in the last month alone they have gone up 20 cents.

It’s not necessarily surprising to see gas prices rise during this time of year, says Michelle Donati-Grayman, communications manager for AAA Arizona. There are a number of reasons for the increase, the consistent one being the switch to the summer blend of fuel, which is more expensive to produce.

Even though this time last year saw gas prices at $2.30 per gallon, it’s still expected over 740,000 Arizonans will be taking to the roads this summer. Donati-Grayman says AAA has been advising motorists to budget because families are predicted to pay an extra $200 for gas during these hot months.

Along with annual factors such as the summer fuel blend and anticipated high demand for gas, there are also reasons for the prices that are specific to 2018.

“You have geopolitical tensions,” Donati-Grayman says. “Specifically, withdrawing from the Iran nuclear deal has impacted the oil prices, which in turn has resulted in higher retail prices for consumers. You have global demand which is increasing, and global supplies which are decreasing. The price of crude oil has been testing high as well.”

As usual, Tuscon drivers will continue to see averages below $3 per gallon. Donati-Grayman says it’s expected to be around the $2.80 range. On the other hand, Flagstaff and Scottsdale will be seeing some of the highest prices.

TED SIMONS: GAS PRICES ARE ON THE INCREASE WITH NO LET UP IN SIGHT AS THE SUMMER TRAVEL APPROACHES. HERE TO TALK ABOUT WHY WE ARE PAYING MORE AT THE PUMP AND HOW THAT MIGHT AFFECT TRAVEL PLANS IS MICHELLE DONATI-GRAYMAN OF AAA ARIZONA. GAS PRICES, A THREE YEAR HIGH. WHAT'S GOING ON?
DONATI-GRAYMAN: GAS PRICES ARE REALLY STARTING TO PACK A PUNCH TO MOTORISTS. YOU CAN LOOK AT ARIZONA'S AVERAGE, TODAY $3.02 A GALLON UP 20-CENTS IN THE LAST MONTH ALONE. WE WERE THE 14TH STATE IN THE COUNTRY TO REACH THE $3 MARK. THREE OTHER STATES JOINED THE CLUB OVERNIGHT, NOW THERE ARE 17 STATES WITH $3 PER GALLON. WE ARE APPROACHING A TIME WHEN ALMOST HALF THE COUNTRY IS PAYING $3 FOR FUEL. WE HAVE NOT SEEN PRICES THIS HIGH SINCE 2014.
TED SIMONS: WHAT'S GOING ON?
DONATI-GRAYMAN: PRICES GENERALLY INCREASE THIS TIME OF YEAR, WE SWITCH TO THE SUMMER BLEND OF FUEL WHICH IS HIGHER TO PRODUCE AND WE HAVE THE ANTICIPATED DEMAND BEFORE THE SUMMER TRAVEL SEASON BEGINS. DESPITE PRICES ABOVE WHERE THEY WERE LAST YEAR, $2.30 ARIZONA LAST YEAR, FAR CRY FROM WHERE THEY ARE NOW. WE ANTICIPATE 740,000 ARIZONAENS WILL TAKE TO THE ROADS. WITH THAT BEING SAID, THERE ARE ADDITIONAL FACTOR AT PLAY SO YOU HAVE GEO-POLITICAL TENSIONS. THE IRAN NUCLEAR DEAL HAS RESULTED IN HIGHER PRICES FOR CONSUMERS. GLOBAL DEMAND IS INCREASING, GLOBAL SUPPLIES ARE DECREASING. THE PRICE FOR CRUDE OIL IS INCREASING, AT $70 A BARREL. LAST WEEK, A 2018 HIGH FOR THE COMMODITY.
TED SIMONS: ITS INTERESTING YOU MENTION 50 SOME ODD SENTS OVER WHERE PRICES WERE LAST YEAR. WHERE IN ARIZONA ARE PRICES HIGHEST, PRICEST LOWEST?
DONATI-GRAYMAN: IT'S THE USUAL SUSPECT. TUCSON, DRIVERS ARE HOLDING THE AVERAGE BELOW $3 PER GALLON IN THE $2.80 RANGE. UNDER $3, HEAD SOUTH TO TUCSON. MAKE YOUR MEMORIAL DAY PLANS THERE. IF YOU ARE LOOKING FOR THE HIGHER PLACE IN THE STATE, YOU ARE LOOKING AT FLAGSTAFF, SCOTTSDALE, THE USUAL SUSPECTS THAT ARE GENERALLY HIGHER THAN SAY TUCSON. THE PRODUCT IS LESS EXPENSIVE WHEN IT COMES IN. WHICH GETS THAT SUPPLY DIRECT FROM THAT EAST PIPELINE, AND THAT PRODUCT IS LESS EXPENSIVE WHEN IT COMES, AND THAT’S ONE OF THE REASONS WHY TUCSON’S PRICES ARE LOWER.
TED SIMONS: IT'S LOCATION FOR TUCSON BECAUSE THEY ARE SO CLOSE TO THE PIPELINE THAT COMES FROM TEXAS THROUGH NEW MEXICO.
DONATI-GRAYMAN: CORRECT. THROUGH EL PASO. TUCSON HAS THE LUXURY OF THE LOCATION YEAR AROUND. FLAGSTAFF, THERE ARE ADDITIONAL TRANSPORTATION FEES TO GET FUEL THROUGH THERE. THEY HAVE TO PAY FOR THE GAS TO GET GAS TO FUEL UP.
TED SIMONS: YOU MENTIONED CRUDE OIL PRICES, AND THEY ARE UP. IS IT JUST DEMAND. IT IS JUST MIDDLE EAST TENSION? IS IT COMMODITY TRADING? SOMETIMES THERE IS AN ARTIFICIAL HIGH GOING ON HERE. IS IT THAT?
DONATI-GRAYMAN: IT'S A BIT OF EVERYTHING. ALL OF THE FACTORS THAT I HAVE MENTIONED HAVE COMBINED TO PUT US ON A ROLLERCOASTER RIDE WHEN IT COMES TO PRICE OF CRUDE AND THE PRICE OF RETAIL FUEL. THAT STARTED IN JANUARY. WE HAVE STEADILY SEEN PRICES CLIMB SINCE JANUARY. A LOT OF MOTORIST DIDN’T BECAUSE WE HAVE BEEN SPOILED IN RECENT YEARS WITH LOW GAS PRICES. NOTICE IT THE CLOSER WE GET TO $3, PEOPLE STARTED TO TAKE NOTE. ABOUT 40% SAY THEY'LL CHANGE THEIR DRIVING HABITS ONCE PRICES REACH $3 A GALLON. WHETHER OR NOT THEY DO THAT, REMAINS TO BE SEEN BECAUSE IT'S BEEN ALMOST FOUR YEARS SINCE WE WERE AT THE POINT.
TED SIMONS: BUT YOURE SAYING THAT AAA ARIZONA IS KIND OF LOOKING AT THIS FORECASTING THAT SUMMER TRAVEL SEASON SHOULD BE THE SAME IN YEARS PAST EVEN THOUGH WE’VE TIPPED THAT $3 MARK.
DONATI-GRAYMAN: AT LEAST THROUGH MEMORIAL DAY, WE ARE FORECASTING A RECORD HIGH OF MEMORIAL DAY TRAVELERS. 90% WILL GO BY CAR. IT'S CHEAPER TO PUT THE FAMILY OF FOUR OR FIVE IN A CAR, EVEN PAYING FOR MORE EXPENSIVE FUEL THAN IT IS TO PUT THEM ON A PLANE. WE DO ESTRIMATE THAT FAMILIES WILL SPEND $200 MORE THIS SUMMER TO FUEL UP COMPARED TO LAST YEAR. WE HAVE KNOWN THAT PRICES WOULD BE MORE EXPENSIVE THIS SUMMER. WE HAVE BEEN SAYING FOR SOME TIME, BUDGET ACCORDINGLY. MAKE SURE YOU’RE BUDGETING FOR THAT EXTRA FUEL COST. WE DIDN'T SUSPECT THAT PRICES WOULD GET AS HIGH AS THEY ARE NOW. WE DO BELIEVE THERE IS ROOM FOR THEM TO INCREASE.THE DURATION THAT THEY REMAIN HIGH IS REALLY GOING TO DEPEND ON THE PRICE OF CRUDE OIL AND DEMAND. IF THOSE TWO THINGS REMAIN HIGH, THEN RETAIL PRICES WILL CONTINUE TO INCREASE. IF WE SO CRUDE OIL SETTLE BACK BELOW THAT $70 MARK THAT COULD MEAN THAT THERE IS SOME STABILITY IN THE FUTURE, BUT IT'S GOING TO BE A VOLATILE SUMMER FOR GAS PRICES. THAT'S NOT EVEN TALKING ABOUT HURRICANE SEASON AT THIS POINT.
TED SIMONS: OH MY GOODNESS, WE FORGOT ABOUT THAT. YOU TALKED ABOUT GEOPOLITICAL TENSIONS, THE IRAN DEAL. CANSOMETHING REGARDING NORTH AND SOUTH KOREA, NOT EVEN KNOWN AS AN OIL PRODUCING REGION AND AREA, IF THERE IS TROUBLE THERE, THERE'S TROUBLE WITH CRUDE OIL PRICES, ISN'T THERE?
DONATI-GRAYMAN: THE MARKET LOVES STABILITY. ANY TENSIONS THAT COULD CAUSE INSTABILITY OR COULD CAUSE THE MARKET TO REACT, WITH THE IRAN DECISION, THERE WAS MOVMENT IN THE MARKET BEFORE THAT DECISION JUST BECAUSE THERE WAS TALK OF A DECISION, SPECULATION OF WHAT THE DECISION WOULD BE. NOTHING HAS TO HAPPEN FOR THE MARKET TO REACT. WE ANTICIPATE THIS TO BE A VOLATILE SUMMER FOR THE PRICE OF OIL, WHICH MEANS IT’S GOING TO BE A MORE EXPENSIVERE SUMMER FOR GAS PRICES DEPENDING ON WHAT HAPPENS WITH THE COMMODITY.
TED SIMONS: AND AGAIN, IT AFFECTS HOW MUCH PEOPLE DRIVE AND IT AFFECTS HOW MUCH PEOPLE SPEND ON THEIR VACATION. INCREASING GAS PRICES IS KINDA LIKE A TAX.
DONATI-GRAYMAN: WE SURVEYED ARIZONANS AND ASKED THEM SOME QUESTIONS ABOUT THEIR TRAVEL PLANS. AND ONE RESULT THAT I FOUND REALLY INTERESTING WAS THAT ALMOST 30% SAID THEY WERE PLANNING TO STAY WITH FAMILY AND FRIENDS. SO THAT IS A DECISION THAT MIGHT CONTINUE TO GROW IF PRICES REMAINE HIGH. BECAUSE THE LAST TIME, 4 YEARS AGO WHEN GAS PRICES WERE THIS HIGH MOVING INTO MEMORIAL DAY, WE FOUND THAT CONSUMERS WOULD GET VERY CREATIVE BEFORE CANCELING THEIR PLANS ALL TOGETHER. STAYING WITH FAMILY AND FRIENDS VERSUS STAYING IN A HOTEL, NOT EATING OUT AS MUCH. A LOT OF THINGS CHANGE BEFORE THEY CANCEL THEIR TRIP ALL TOGETHER.
TED SIMONS: MICHELLE DONATI-GRAYMAN LATER OF AAA ARIZONA, GOOD TO HAVE YOU HERE. THANKS FOR JOINING US. AND LATER ON HORIZON, SEE HOW RESEARCHERS ARE TRICKING VIRUSES INTO FIGHTING CANCER.

Michelle Donati-Grayman: AAA Arizona

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