July 16, 2013

In Maine, sudden sting at the gas pump

Summer demand and Egypt unrest push the state's average price well above the national level, and it could jump another 25 to 30 cents.

By J. Craig Anderson canderson@pressherald.com
Staff Writer

PORTLAND – Larissa Montminy had one word Monday for the price of the gas she put into her new Honda Civic at a Sunoco station on Forest Avenue.

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Tom Vire of Westbrook fuels up Monday at the Atlantic station on Broadway in South Portland. Maine’s average price for regular gas was $3.71 Monday, 7 cents above the national average. A month ago the Maine price was $3.58, 6 cents below the national average.

John Patriquin/Staff Photographer

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Additional Photos Below

GO TO GasBuddy.com to find the lowest gas prices in Maine.

"Awful," said Montminy, who is 20 and works two jobs, as a community assistant and a waitress.

Montminy paid about $37 for 10 gallons of gas Monday. She said she usually looks for the lowest price and her 2013 Civic gets good mileage, but she has noticed that her regular 108-mile trip from Bangor to Auburn to visit family is noticeably more expensive.

Her trip is likely to cost even more, with summer tourists in Maine and political unrest in Egypt the biggest factors pushing the state's gas prices above the national average in recent days, industry analysts said.

Maine's average price for regular gas was $3.71 per gallon Monday, about 7 cents more than the national average, according to the Minnesota-based gas price analysis firm GasBuddy.com.

A month ago, Maine's average price was $3.58, according to GasBuddy.com, while the national average was just under $3.64.

One of the biggest contributors to gas price fluctuations is the price of crude oil. The average price for a barrel of crude has increased about 8 percent in the past month, from $98 to $106, according to GasBuddy.com.

Reasons for the price spike in Maine are numerous, but they boil down to two basic categories: increased demand, and the perception that supply could decrease in the near future, said Charles Colgan, professor of public policy and management at University of Southern Maine's Muskie School of Public Service.

In Maine, as in other states in the region, demand for gasoline increases in the summer as more people take to the roads for local and cross-country trips, he said.

As demand approaches the maximum amount that regional refineries can produce, it drives up prices at the pump, Colgan said.

"We're at the peak limit for refining capacity right now," he said.

Demand for gas in Maine is likely to remain at that peak for the next six weeks, until tourism begins to taper off, Colgan said.

On the supply side, motorists in Maine are paying for Egypt's political instability in the form of what Colgan called a "risk premium."

Unlike states in the Southeast that get a large portion of their gasoline from crude oil drilled in the Gulf of Mexico, most of Maine's petroleum comes from the Middle East and Canada, he said.

At the moment, investors are betting on a possible disruption in the supply of oil from the Middle East because much of that supply -- 3 million barrels a day -- passes through Egypt's Suez Canal on its way to the U.S. and Europe, Colgan said.

The recent overthrow of Egyptian President Mohamed Morsi and uncertainty about the type of government that ultimately will take power in that country have led investors to drive up the price of oil futures on speculation that the supply passing through Egypt will be disrupted, petroleum analysts have said.

"The oil coming through the Suez Canal is an issue for Maine and the Northeast, because we do get oil from the Suez Canal," Colgan said.

Analysts' predictions that gas prices could increase another 25 to 30 cents in the coming month aren't unrealistic, he said, even though it's unlikely that Egypt would shut down the Suez Canal, since its revenue represents about half of the country's gross domestic product.

"When people have concluded that the risk was overblown ... prices will decrease again," Colgan said.

Aaron Truman put $10 worth of gas in his mom's van Monday at a station on Broadway in South Portland, paying $3.80 a gallon. That probably didn't fill one-fifth of the tank, he said.

(Continued on page 2)

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Additional Photos

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Tanika Newell from Westbrook gets gas at Ralph's/Holly's in Westbrook as she and other motorists react to higher gas prices on Monday, July 15, 2013.

John Patriquin / Staff Photographer

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A sign at Ralph's/Holly's in Westbrook announces gas costs $3.69 per gallon. Gas prices have skyrocketed in Maine this summer.

John Patriquin / Staff Photographer

 


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