Jacob McGuire was surprised to hear gas prices hit a record high Thursday and will likely continue to increase through the summer months. The animal, dairy and poultry science freshman plans to drive to Pensacola, Fla., with 11 friends during spring break. But McGuire is not too worried about the price of gas. “I don’t really place a cost on fun,” he said. McGuire said the increased gas prices may hinder his vacation spending but will not affect his decision to travel. Other students will be forced to pay the higher prices because of required travel. The current state average for regular unleaded gas is $3.174 per gallon, according to the American Automobile Association and the Oil Price Information Service. This is a record-high for the state. A year ago, the average was $2.431 per gallon. Gas in Baton Rouge also hit its highest recorded price Thursday, at about two cents less than the state average. Analysts have predicted oil prices will continue to rise as summer approaches. J.P. Abon, secondary education senior, plans to drive to Nashville, Tenn., for a job this summer. This will be Abon’s second summer in Tennessee. He said this past year’s drive cost him about $85 one-way in his 1999 Chevy Lumina. Abon said he has noticed gas prices steadily increasing. “I knew it was coming,” he said. Abon said he has no choice other than to drive to Nashville because he will need his car in the city. “The best thing I can do right now is just wait and see,” Abon said. “Hopefully the gas prices will go down.” He plans to bring his bike with him for short-distance transportation. McGuire is planning a road trip to Connecticut to visit a friend this summer. He said he would not cancel his plans unless gas prices increase to more than $3.75 a gallon. According to Mike Right, AAA regional vice president of public affairs, McGuire might need to start reconsidering his travel plans. Right predicts that summer travel will be “flat” compared to this past year. He said the usual 2 to 3 percent growth probably will not continue. “People will be less inclined to travel,” Right said. “They will make decisions about their travel, such as reducing the distance that they travel or shortening the duration of their stay in order to offset the increased cost.” Right said decreased travel this summer will be a blow to the tourism industries in most states, which could affect some states more than others. “[Tourism] certainly is a major portion of [Louisiana’s] economy,” Right said. Right said supply and demand is not the force driving crude oil prices. He said hedge funds pour money into commodities to protect against inflation. He said increasing gas prices are a byproduct of this process. Hedge fund managers bet which commodities will increase in value. They then buy those commodities in preparation to re-sell them when the value increases. But by purchasing commodities, hedge funds sometimes increase demand and affect market value. Steve Sears, Department of Petroleum Engineering chair, said gas prices may be affected by hedge fund activities but are ultimately increasing because of increased demand and a strained supply. Sears said the high prices are a national trend. The price of crude oil reached a record of about $111 a barrel worldwide Thursday. “That’s primarily because demand from the developing countries like China and India, along with continued demand from the United States and other already developed countries, is pushing the limits of the supply,” Sears said. Right said gas prices will eventually decrease but is not sure when that will happen. Sears said the demand for gas would have to decrease for the price to decrease. He said this might happen as a result of an economic downturn or increased popularity of fuel-efficient vehicles. But Sears said even these changes would probably not be enough to decrease the demand. “Developing countries like China are still wanting more and more energy,” Sears said. Allan Pulsipher, Center for Energy Studies director, said there are positive effects of increasing gas prices. Pulsipher said Louisiana businesses producing and selling energy will see an increased price for their product. He said the state both owns oil and gas reservoirs and receives shares of their royalty proceeds. It also taxes the production, he said. “Louisiana is a very energy-intensive economy,” Pulsipher said. “We use more energy per unit of production or per unit of consumption than almost any other state.” Pulsipher said while gas prices seem high, Americans are actually spending a lower proportion of their incomes on energy than they did before prices started escalating in the 1950s.
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