Gas prices climb, demand down

Photo by Heather Meadows

Photo by Heather Meadows

Gas prices continue to increase, despite a decreased demand for fuel.

Oil prices closed Friday at $97.49 a barrel on the New York Mercantile Exchange, $1.29 more than the prior week. Nationwide retail prices average $3.676 a gallon, while Georgia's average is $3.669.

"Despite negative news about the job market and consumer sentiment, investors are seemingly optimistic the U.S. economy will start to pick up, a statement made for quite some time with no solid data to support the claims," said AAA South spokeswoman Jessica Brady.

Gas prices are averaging about a dollar more than for the same time period last year, though fuel demand has decreased by 1.4 percent since last year, according to the Department of Energy. Gas consumption is down .09 percent year over year.

"It's been a very bearish market for the past four to six weeks. We've seen oil prices and retail gas prices decrease. Investors are looking at any piece of positive news to drive up oil prices and they continue to use whatever they can," Brady said. "For example, the news that Citigroup and Google had better profits than expected, they used that to say the economy is better and that means fuel demand will increase."

A decade ago, speculators controlled about 30 percent of the oil market; today they control about 80 percent, Brady said. The Federal Trade Commission has launched an investigation to determine if the oil market is being manipulated to increase profits.

Concerns over the national debt and U.S. credit rating have decreased the value of the dollar and helped keep oil prices elevated as well.

As for what to expect for the rest of the summer, Brady predicts prices will continue to ebb and flow, but added that, "It's going to come to a point where they can't ignore low consumer sentiment, decreased fuel demand and slow economic recovery." At that point, gas prices should stabilize or decrease.

A recent survey by AAA indicates Americans are still traveling this summer, but are vacationing closer to home and using money they normally would spend on gas for entertainment and other activities.