Tales from the Pump
It's a sunny Friday afternoon in Bridgeport, Conn., and drivers are feeling the pain as they pull in to the Freedom Premium Fuels service station. Nate Carter, a polished young salesman for the Cumulus Media (CMLS) radio network, watches the gas pump tick past $60 and then $65 as he fills up his car. "I'm probably going to sell it within a month," he says, nodding to the sleek, silver Nissan 350Z. He loves the car, but he's going to trade it in for a more fuel-efficient Nissan (NSANY) Altima to save on gas expenses. "It's not worth paying the extra money," he says. "It becomes a luxury at a certain point."
Such is life at the pump these days. As gas prices surge ever higher, Americans who long resisted cutting back are beginning to find that they have to. Bridgeport may be the best vantage point for seeing how rising fuel prices are changing the lives of people buffeted by a soft economy, weak job market, and a housing slump. At the time of Carter's visit, the Connecticut town held the distinction of having the highest average gas price in the country, according to the Web site Gasbuddy.com. The site, which compiles information from users to steer drivers toward the cheapest fuel, put the average price in Bridgeport for a gallon of regular unleaded gasoline at more than $4.29.
Bridgeport's Claim to Fame
Every driver has a tale to tell about the effect of rising fuel costs. Some stories are of minor changes in daily patterns; others are more substantial. Mark Zoom, a bearded bear of a man who works as a mason, only puts $25 into his truck at a time, and gasses up more often. Bridgeport resident Sam Larkin says he travels less often, and takes the train or bus when he goes to places like New Hampshire. A Honda (HMC) CR-V driver who identifies himself only as Richard says he's divorced and can't afford to visit his kids as frequently as he would like. "I've got a bad heart, a tumor inside," he says. "I've got to save money to go to the doctor."
Perhaps only extreme circumstances could turn a service station emblazoned with red, white, and blue stripes into a confessional. Over the past year, gas prices around the country have exploded. The primary reason is an immense runup in crude oil prices, which have climbed from an average of $64.20 a barrel last year to more than $130 a barrel in recent weeks. That's helped push prices at Freedom Premium Fuels to $4.319 for a gallon of regular unleaded gas, slightly above the city's average.
To be sure, it's not the most expensive gas in the area. A Mobil (XOM) station in nearby Westport charges $4.66. As high as that is, there are stations around the country that charge more. Jason Toews, Gasbuddy.com's co-founder, points to a station on Beaver Island, a 13-mile-long island in Lake Michigan, where one of the site's members spotted a gallon of regular unleaded at $5.19 last week. And there are isolated stations from Florida to Alaska and Hawaii that charge more. (Tucson, at $3.696 a gallon, is the city with the lowest average gas price, about 14% lower than Bridgeport.) But in the Lower 48, no state's residents face higher prices than Connecticut's, and no one in the Nutmeg State pays more on average than drivers in Bridgeport.
There are seasonal factors, too: Gas prices tend to climb during the summer, when millions of drivers hit the road on vacation. In total, Connecticut drivers pay the second-highest gasoline tax in the country at 62.5¢ a gallon, trailing only California. The national average price of a gallon of regular unleaded gasoline on June 2 was $3.976, up 4% from the previous week and some 82% from a year earlier, the federal Energy Information Administration reported.
The rapid ascent of gas prices comes at a time when the economy is already precariously close to recession.
A survey last month by Discover Financial Services (DFS) found that more than half of Americans are cutting back on everything from buying groceries to eating out as record-high energy costs join falling home values, declining company payrolls, and climbing food prices. Last week, the University of Michigan and Reuters consumer sentiment survey, considered a key gauge of the nation's mood on economic matters, returned its lowest reading in 28 years.
It's no surprise to Leon Haviland. The Bridgeport resident, in a black sleeveless T-shirt, pulls in for gas in a customized black Chevy pickup with oversized wheels and chrome exhaust pipes behind the cab. Haviland says he's a mechanic and boasts that he has assembled the truck "from the ground up." He proudly shows off his work under the hood, but says gas prices are forcing him to cut back. "I built it and I can barely drive it," he says. He only puts in $20 worth of gas at a time. A recent trip to Florida to visit his fiancée's father, who is gravely ill with lung cancer, cost more than $1,000, Haviland says.
Not everyone can cut back on driving. Jairo Rojas, a handyman who lives in Bridgeport and travels about 300 miles a week in his blue Plymouth Voyager minivan, has tried to take jobs close to home to reduce his gas budget. Still, he says, the sky-high price of gas in southern Connecticut means he's working longer hours to bring home the same paycheck. "I had to get some closer customers to save some gas," he says. "I'm not driving anymore for 400 or 500 miles a week." Zoom, the mason, argues it doesn't make sense to fill up his ramshackle pickup. "I don't fill it up anymore," he says. "If my truck stopped working tomorrow, I've got $100 in the tank and I can't spend it. If I put a little bit in at a time, I get to have more money in my pocket."
As high as prices are now, they could head much higher if the price of oil continues to rise. Some observers have predicted a "super-spike" that could bring the price of a gallon of crude to $200 or beyond. Last month, an analyst at Wall Street giant Goldman Sachs (GS) predicted oil could reach that level in the event of a "major disruption" in supply. Dallas Federal Reserve economist Stephen Brown, who created a model to help explain the forces that drive gas prices, predicts such a spike could lift the average price of regular unleaded to $5.80 a gallon. Brown cautions that $200-a-barrel crude isn't "a most likely forecast," but is instead something that Goldman considers "within the realm of possibility."
Under current conditions, it's only natural that drivers will shop around. But that's not Carter's strategy. His reasoning: It's not worth it. "Five cents now is, what, a 1% savings?" he asks. "It might make me feel better, but practically I'm going to spend more money looking for better gas prices than I am paying an extra 4¢ or 5¢ per gallon."