Gas Prices

July 21, 2015

Transcript:

TED SIMONS: Coming up next on "Arizona: Horizon," why gas prices have spiked and how the Iran nuclear deal could impact future prices at the pump. Also tonight a look at the state's latest tourism numbers. And we'll hear from a participant in the local U.N. climate change packet. Those stories next on "Arizona Horizon."

VIDEO: "Arizona Horizon" is made possible by contributions from the Friends of Eight, members of your Arizona PBS station. Thank you.

TED SIMONS: Good evening, and welcome to "Arizona Horizon," I'm Ted Simons. Arizona ended the budget year with a $266 million surplus, that's $400 million better than the expected deficit lawmakers used when building their current year budget. Unexpectedly high income tax collections put the state well into the black. And this year's annual kid count by the Annie E. Casey Foundation shows Arizona ranked 46th nationally in child well-being. The state scored especially bad in children living in high poverty areas. Also the number of kids without health insurance is almost double the national average. Positive results include fewer Arizona children using drugs or alcohol and more kids aged 16 to 19 either going to school or working.

TED SIMONS: Perhaps you've noticed a considerable jump in gas prices the past couple of weeks. Here to explain what's happening and how the Iran nuclear deal might affect future gasoline costs is Linda Gorman of Triple-A Arizona. Good to have you back. Thanks for joining us.

LINDA GORMAN: Thank you for having me.

TED SIMONS: So gas prices are increasing, it was up like 11 cents in one week in Arizona. What's going on?

LINDA GORMAN: Right, well prices have definitely been soaring over the last couple of weeks and it really -- The reason behind that is California. California has had some refinery issues as of late which really caused a tightening of supplies in that area. And as you probably know, we get about half of our gasoline from that California pipeline. Anything that impacts prices over there, any supply disruption, refinery issues is going to ultimately impact our prices.

TED SIMONS: So we were up 11 cents in that one week. Nationally that increase was only 1 cent, you're saying that's the reason.

LINDA GORMAN: Yes, that's the reason. And national prices have fallen at a more rapid rate than Arizona prices as of late. Prices over the last couple of days have started to stabilize but honestly, it's still pretty volatile, depending on what part of the state you live in. We've heard reports from drivers saying they've seen increases of 10 and 15 cents overnight.

TED SIMONS: Flagstaff is usually the highest when you come on the show and talk about this and Tucson is usually the lowest? The same?

LINDA GORMAN: Yes, especially this time of year. Flagstaff is usually higher as is Scottsdale. Tucson is lower. We have a stricter EPA regulations here in Phoenix that don't necessarily apply to Southern Arizona. Also southern Arizona mostly gets their gasoline from that El Paso pipeline, is a different fuel blend that's easier to produce.

TED SIMONS: These California refineries. The reports are there's too much oil on the market, the reports are that the refinery outputs are all up. What's going on in California?

LINDA GORMAN: It's a really interesting situation, not just in California but really in the market right now. Oil prices are not able to sustain really anything above $50 a barrel. Wild swings throughout the day. There is a lot of oil in the marketplace and these refineries are just outputting the gasoline. For the most part we've been exporting gasoline. A lot of gasoline in the past. We could have used it here but we've been exporting to it other countries because it's more profitable once you send it outside of the United States. There have been some refinery issues in California as of late, which unfortunately have then created a tightening of supply and then not enough gasoline. So it's, you know, half a dozen of one, six of the other unfortunately.

TED SIMONS: How long before these issues are figured out and then corrected?

LINDA GORMAN: It looks like from a refinery standpoint, at least in the short-term, that situation is starting to settle down. Prices are starting to calm down a little bit and stabilize. Really, aside from the refinery issues, this is the best time of year for gasoline prices typically. We've had a very calm hurricane season, nothing weatherwise impacting supply or production. Oil prices are favorable and we're going into what we call our low demand season. Once we hit Labor Day, people just don't drive as much.

TED SIMONS: So the Iran nuclear deal is out there, and it's not going to be an immediate impact, it has to be approved. But if it goes forward next year or so, will we see effects at the pump?

LINDA GORMAN: There's a lot of speculation about that. Last year we heard a $2 price speculation. It's the second time we've heard it. First was in January when demand was reduced. Arizona did drop below $2 a gallon for about three weeks. We heard last week with the Iranian deal. It really is too soon to tell, but it is going to note they have not actually brought gasoline from Iran since 1995. So if in fact that deal does go through and the gasoline, the oil starts to flow here, then it will definitely have an impact on gas prices. It's just too soon to tell when that could happen and how far those prices could fall.

TED SIMONS: And they have to build their infrastructure.

LINDA GORMAN: That's right. This isn't going to happen overnight, and even next year this is really a long-term outlook. The other point not being made in these discussions is what about our long term energy strategy? We still need something that's going to replace the gasoline tax gasoline, in future generations. As we know, we are at the mercy of countries that are just unstable. What are we going to do from a long term perspective.

TED SIMONS: And Iran has more than a third of the gas reserves of the world. Before you go, new information on this washed-out bridge, I-10 eastbound and westbound. Sounds like something could happen by Friday?

LINDA GORMAN: It looks like they are going to be opening one lane each direction. That could alleviate some of the traffic loads that people are concerned about, and good timing for the weekend travel.

TED SIMONS: Okay, so keep an eye on that. You said one lane in each direction. That will probably be open for quite awhile, I would imagine.

LINDA GORMAN: Yes it would look like it.

TED SIMONS: Prepare for slow going, at least.

LINDA GORMAN: There are a lot of options, there are different routes you can take, and it's not a holiday weekend but definitely pack patience. Make sure you fill your gas tank before you hit the road. Gas prices are going to unpack at any stations around the route, between here and California, it is going to be around those rue routed areas.

TED SIMONS: And last question, you were saying $2 a gallon could be possible post Labor Day is possible?

LINDA GORMAN: More likely into the fall and winter. We see our lowest prices of the year around that time anyway and all signs point to a favorable fall and winter for prices.

TED SIMONS: As far as high prices now, probably through summer we will see not too much variation you don't think?

LINDA GORMAN: Prices will continue to be somewhat volatile over the next couple of weeks. Around Labor Day they will start to decline and we'll see that gradual decline for the rest of the year.

TED SIMONS: Alright, good information Linda, thank you so much.

LINDA GORMAN: Thank you.