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Fuel Gauge Report

January 4, 2012

Retail gasoline prices in East Tennessee continued rising for the most part this week, but at a slower pace than last week. Average wholesale gasoline prices at the Knoxville terminal actually fell to a low of $2.63 Thursday, then climbed back up to yesterday’s $2.67, which is an increase of more than 1.5 cents over the previous Tuesday.

Crude oil prices have been moving above the $100-per-barrel mark for much of the past week, lifted by a threatened boycott of Iranian oil by the U.S. and European Union countries, and Iran’s threat to retaliate by blocking oil shipments through the Strait of Hormuz. Favorable economic news in the U.S. and China also helped push oil prices up, but concern over Europe’s shaky condition kept them from rising higher.

How much of this week’s increase comes from the elimination of the federal ethanol subsidy on January 1 is hard to pinpoint. Analysts predicted about a 4-cent increase in the pump price after the subsidy ended, and Knoxville wholesale price averages have gone up about that much since Thursday. However, higher crude oil prices played some part in that increase.

For the best efficiency drivers should make sure their cars are in good shape, use the most fuel efficient vehicle possible, and combine trips to reduce gasoline use. Other options are to take public transit where possible or ride a bike. Other suggestions are in AAA’s Gas Watcher’s Guide, free at AAA offices, and on the web at www.aaaet.com.