Welcome to the new ‘normal' of high gas prices
August 1, 2011
Gasoline prices already seem to be retreating from their record $4-a-gallon levels that much of the country saw this spring.
That’s good news. Gas that expensive for a sustained period would put an already shaky U.S. economic recovery into serious question, according to some experts.
But even at around today’s $3.60 a gallon, many Americans in general - and HVAC contractors in particular - are still not happy about what it costs to fill up their tanks. Accepting maybe, but not happy.
That’s what we found in this month’s feature on the cost of fuel and how sheet metal contractors are coping with it.
It seems this is almost an annual story for us, or at least one we write every few years. The first time Snips tackled the subject six or seven years ago, gas was about $2 a gallon. A station with prices that low in much of the country today would cause a traffic jam as motorists lined up to fill their tanks.
At the time, however, gasoline around $1 a gallon was still fresh in many peoples’ memories, and a lot of people hoped it could get down there - or at least close to it - again. After all, oil prices had collapsed in the 1990s, sending per-barrel prices under $10 for a time and prices at the pump to around 50 cents a gallon in some parts of the country. (The cheapest price I can recall paying for gasoline was a little more than that at a small station in rural Kentucky or Tennessee. Many Snips readers surely remember gas prices far lower decades ago, but adjusting for inflation, gasoline never cost less than what it did then.)
The low prices wreaked havoc on the oil-dependent economies of the Middle East and wasn’t easy on some of the oil-producing parts of the United States, but the overall U.S. economy boomed, with consumers buying all the gas-hungry, high-profit sport-utility vehicles the automakers could produce.
But the 2001 terrorist attacks, the exponential growth of former Third World economies such as China and India, and a tough recession in the last years of the previous decade seemed to reset gas prices at a new normal of more than $3 a gallon. Some experts still say gasoline of $5 to $7 a gallon is possible within a few years once the world economy is on surer footing.
The last time gas hit $4 a gallon back in 2008, contractors contacted for our story said they were considering the use of global positioning systems to track drivers’ habits and requiring the use of smaller, more fuel efficient vehicles instead of the big trucks many employees favor.
In interviewing contractors for this year’s gas story, I definitely noticed an air of resignation to prices that can put a squeeze on profits, even as pump prices were dropping under $4 in most of the country. Many seem to believe gas for $2 a gallon is likely gone for good, and the return of $3 a gallon is questionable. The best you can do in such a situation is cut costs, raise prices or both.
What has made the run-up in gas prices so tough on so many people is it was so quick and unexpected. It’s hard to adjust your costs and budget when your monthly gasoline bill suddenly goes up hundreds or thousands of dollars, as some contractors have told me.
How are you handling gas prices this season? E-mail me at firstname.lastname@example.org.