2008 Woodie Awards
AAA predicts gas prices, provides fuel conservation tips for motorists
Grant Smith
Issue date: 10/24/07 Section: College News
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"We feel it's a very useful tool," said Greg Seiter, public affairs manager for the Hoosier Motor Club, a chapter of AAA.
Along with gas prices, AAA provides fuel conservation tips and route planners for economically sound driving directions. But as Seiter admits, it's difficult to predict gas prices.
"The breakdown of gas prices on a station-by-station level is really kind of a mystery," Seiter said. "There are a tremendous amount of variables, which make them almost impossible to predict."
First, and most importantly - the cost of the crude oil and refining it. Next, add transportation costs: from the oil well to the refinery, the refinery to the station providers and finally the delivery to individual stations.
In addition to the overhead costs, other factors include time of year, the weather, foreign policy and the open market.
Local, state and federal taxes must be considered, too. They don't fluctuate as often, but add to the total cost.
After all this, the prices at the individual stations are dictated from a corporate office and handed down to station managers.
Consumers may be able to expect some relief at the pump in the next few months, despite the open market and America's actions overseas, Seiter said
"The price of crude oil is dependent on supply and demand, and there is an overall decreasing demand with the coming of fall," Seiter said. "With the end of summer, people usually do not drive as much."
In the summer, many gas stations switch to a "summer blend" gasoline, a reformulated gas with additives to combat pollution. Combined with the decrease in demand, the switch back to standard fuel could have a positive effect on gasoline price.
During fall months, however, cool air over tropical waters could result in hurricanes, which would have negative effects on fuel prices.
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