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Gas Prices To Back Off Drive Toward Record

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By RICH SHOPES, The Tampa Tribune

Published: November 14, 2007

TAMPA - Gas prices likely won't hit a new high this month, thanks to increased oil production and a report that says worldwide demand for light crude will decline next year.

For consumers, that means gas prices will start coming down next week, maybe as much as a dime.

"I think prices are about to tip, unless there's a major supply interruption," said James L. Williams, an oil industry economist.

Oil prices that last week seemed on an inevitable path toward $100 a barrel slid more than $3 to $91 on Tuesday after the International Energy Agency cut its demand forecast and said crude supplies are rising.

Retail gas prices, meanwhile, climbed further above $3 a gallon amid predictions that prices will increase as oil approaches $100 a barrel. The national average price for a gallon of gas rose to $3.10 on Tuesday, and in Florida the average climbed to $3.15, according to AAA Auto Club South.

If not for the drop in oil prices, November could have been on pace to beat the record set in March 1981 when the Iran-Iraq war pushed gas to $1.35 a gallon - $3.18 in today's dollars.

In the 26 years since, gas prices have never risen as high. This year came close, though. In May, motorists were paying $3.15 per gallon. And this month, the price rose to just pennies away from the all-time high.

Earlier price peaks were driven by calamities that fueled worry about oil supplies.
Gasoline prices in the wake of Hurricane Katrina jumped to an inflation-adjusted $3.04 a gallon in 2005. The U.S. invasion of Iraq in March 2003 saw prices jump to $1.91 a gallon in today's dollars.

Now, prices are increasing because of industrial progress, not calamities.

Developing nations are shifting from "animal power and foot power" to tractors and cars, said Brad Kamp, an associate professor of economics at the University of South Florida.

Over the years, he said, "The supply side has not increased as fast as the demand side."
Chris Bush is president of Clearwater-based Titan Metal Service, a steel supplier. He says the run-up in gas prices has driven up operating costs by 10 percent over the past six months. He can't pass on those increases to customers, especially while the housing market is in a slump, so he's trying to find other ways to save money.

"We're getting squeezed at both ends," he said.

Fueling his Volvo at the Mobil station at Gandy Boulevard and South Dale Mabry Highway, Bill Hayston, a 30-year-old massage therapist, said it seems like he's paying more each month to drive from his home in Seffner to his job in South Tampa.

On Monday, he paid $38.11 to put gas in his tank.

"And that's not even full. It's about three-quarters full," he said. "That's what I can afford right now."

Information from The Associated Press was used in this report. Reporter Rich Shopes can be reached at (813) 259-7633 or rshopes@tampatrib.com.

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