Horizon, Host: Ted Simons

February 17, 2011


Host: Ted Simons

Gas Prices


  • What's behind the recent increases in gas prices? We'll talk with AAA Arizona.
Guests:
  • Michelle Donati - Triple A Arizona
Category: Business/Economy   |   Keywords: money, gas,

View Transcript
Ted Simons: Triple A Arizona is keeping an eye on gas prices and advocating for a number of bills working their way through the state legislature. Here with the latest is Michelle Donati of Triple A Arizona. Good to see you again.

Michelle Donati: Good to see you.

Ted Simons: What's going on with gas prices? Where are we by the way as far as the numbers are concerned?

Michelle Donati: Statewide average today is $3.18 per gallon. We're at a 28-month high. Motorists have not paid this much for gas in quite some time and their taking note of it.

Ted Simons: As far as the state is concerned, how are we doing in Phoenix compared to other parts of the state?

Michelle Donati: It's going to vary. Phoenix is usually right in the middle in terms of the statewide average, Tucson typically pays the lowest and they've held on to that lowest spot, Flagstaff is the highest, they're in the $3.26ish range. They're paying more than anyone else in the state right now for gas.

Ted Simons: Why are we all paying more? What's going on here?

Michelle Donati: Well, a couple of things. A couple weeks ago we had a situation in Egypt, which caused crude oil to spike to a multi-year high, it settled at above $92 per barrel. The interesting thing is, nothing happened tangibly in that process, the canal, the pipeline remained open and operational, they still do. But the threat of something happening in an oil sensitive region of the world was enough to cause the market to spike. That threat has since receded in terms of the market, so we've seen crude oil recede back to the mid 80 range, but prices have continued to increase, in fact the price in Arizona has increased almost a dime about 8½ cents over the last week.

Ted Simons: If it's receding after the turmoil in the Middle East, which by the way is still going on, continuing concern, if that receded, how come our prices keep going up?

Michelle Donati: There's a couple things unique to Arizona. A few weeks ago we had the cold snap that took place, that knocked a couple of refineries off line. Arizona receives its fuel from two pipelines, one from the east which comes in through the gulf, and another that comes in from the west. Which derives from California. The cold snap knocked a couple of refineries in the gulf offline, as a result we saw a tightening and slowing of that line. And looking forward we have refinery maintenance approaching. So as a result of that, we've really seen the east line slow in terms of production, supplies have tightened, we're relying now on the west line more heavily than the east line for fuel. That west line starts in California, you look at California's average gas price, they're at $3.50 a gallon. So Arizona's fuel prices have been tugged higher, and then if you look at the price of wholesale gas prices, those are climbing even quicker than the price of retail, retail margins are down, so Arizona not in the great -- not in a great situation in terms of gas prices right now.

Ted Simons: So not necessarily a supply and demand situation here. It's more of a bottleneck?

Michelle Donati: Yeah. Exactly. It's more of a situation where we're relying more heavily on the west pipeline, and it's really a perfect storm if you look at it by way of the situation happening in the Middle East. The cold snap, now these refinery issues, it really underscores the volatility that can take place in the market. We were talking before the show that Arizona motorists, the last time they saw prices this high it was more of a sigh of relief. They were coming down from the highest price they've ever paid at the pump. Many areas of the state above $4 a gallon. So they were really looking at $3 a little differently than they were looking at them now. Now it's really starting to affect consumer budgets, it may affect travel decisions come spring and summer and business decisions as well.

Ted Simons: Talk to us about the summer driving season. That's when the prices are usually the highest. Are we just going to see a ramp-up now until summer?

Michelle Donati: You know, the fact that prices are at nearly $3.20 a gallon, we're in the second month of the year, does not bode well for motorists. In 2010 the highest fuel price we experienced was $2.72. We're in the second month of the year, we're well above that, so that's certainly not going to mean good things for motorists come spring and summer.

Ted Simons: Before we let you go, another three bills of note Triple A Arizona is looking at as far as the legislature is concerned. A ban on texting, this booster seat bill, and a bill to get people to move over when emergency vehicles are in the inside lane, or in the rail lane. Correct?

Michelle Donati: That's correct. So all three have made great progress at the legislature, the move over law passed out of the senate last week with an overwhelming majority. The booster seat passed out of the house, transportation committee unanimously today. We're excited about this piece of legislation, very hopeful. Arizona's one of three states without a booster seat law. So right now children between the ages of 5-8 and are not required to ride in child passenger safety seats. And as a result we see children losing their lives, being extremely injured, parents believe that parents follow the guidance the state sets. In terms of laws. We polled parents last year in Arizona and found they believe, nine in 10 believe the state has an obligation to update traffic safety laws that are out of date. And provide them with the proper guidance. We believe that house bill 2452 will do just that.

Ted Simons: Before you go, this texting ban, I think we all understand texting while you're driving is not the smartest idea in the world. However, let me get this straight, you can't even read a text as far as this bill is concerned, and yet you're still allowed to enter a telephone number. It seems -- that isn't necessarily all encompassing is it?

Michelle Donati: We really want to get the word out about text messaging in terms of it's not a full cell phone ban, but it does ban text messaging, which Triple A considers to be one of the biggest public health issues on the roads. The good news about this bill is it did pass out of the senate natural resource and transportation committee Monday, and again we believe that all three of these bills have life saving potentials, and so we're extremely hopeful and optimistic about the progress we made so far and looking ahead this legislative session.

Ted Simons: All right. Michelle good to see you. Thank you for joining us.

Michelle Donati: Thank you.

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