Gas prices across the Tri-Cities area reached record highs this week and are likely to continue to rise for two months, according to a Wednesday report from AAA of East Tennessee.
Prices more than the area’s previous record high of $3.09 were spotted in Bristol, Kingsport and Johnson City.
The current national average of $3.246 is also a new record, barely exceeding the previous high of $3.227, which was set on May 24.
This time, the spike in price is not directly related to a change in demand or supply of gasoline. Instead, AAA reports that investors reacting to the falling value of the dollar and sliding prices in other markets are taking an unprecedented interest in crude oil and gasoline futures.
Futures are essentially a contract to buy a commodity – gas in this case – at a certain price with the buyer gambling on the price expected in the future. Buying futures doesn’t guarantee a profitable return.
The steady upward trend in energy costs has led investors to view the market for crude oil as a stable alternative to other markets suffering from the slumping dollar.
Steb Hipple, a professor of economics at East Tennessee State University, said the increased investor interest is the latest variable added to a market already affected by difficult-to-gauge factors like weather, supply and consumer spending.
"It is a very, very volatile market because of all these different factors that are constantly changing, and there are elements like security and speculation," he said, conceding, "A lot of times gas prices go up and I don’t think anyone knows why."
One reason for the recent spike may be the shift refineries make each spring to cleaner-burning fuel additives for the summer season. The transition, which AAA officials say is occurring now and won’t finish until the middle of May, historically results in higher prices at the pump.
Blountville, Tenn., was the most expensive place to fill up in the Tri-Cities on Wednesday, with an average of $3.191 a gallon, according to AAA’s Fuel Price Finder on its Web site. Blountville just beat out Bristol – $3.188 on the Tennessee side and $3.184 in Virginia – and Abingdon at $3.187.
The cheapest average per gallon of gas in the area – Kingsport’s $3.144 average – was 5 cents above the area’s previous record.
BRENT CARNEY is a Media General multimedia intern and can be reached at (276) 645-2568 or bcarney@bristolnews.com
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