$4 gas prices predicted for summer

Judit Hutson and her husband Ric Hutson bought their house in the Desert Cedars subdivision in 2005 for $255,000 with intentions of making Maricopa their long-term home.

Then the real estate recession arrived and the Hutsons family watched the value of their home and others in their neighborhood plummet and the people they called neighbors vacate the town. 

“It is amazing the number of people who have come and gone since 2005,” Judit said. “We are one of the few originals remaining.”

While home values and a sour economy drove away most of the family’s friends, it is a new threat that could ultimately drive away the Hutson’s and many more Maricopa families along with them: rising gas prices.

The price of regular unleaded gasoline is predicted to escalate past $4 a gallon this spring and possibly surge to $5 next year.

“If we can’t afford to go to work, how can we afford to keep up our house payment?” Judit said.

Rising prices
Since October 2010 gas prices have gone up steadily by about 10 cents a month on average in Arizona and stand at about $3 a gallon as of the first week of January.

These prices are significantly higher than normal for this time of year, said petroleum analyst for gasbuddy.com Patrick DeHaan. “We are on track to have a summer similar to 2008, when prices were around $4 a gallon.”

According to information obtained from GasBuddy.com the average price for a gallon of regular unleaded in was $2.54 in January 2010. In January 2009, the price dropped to $1.50 a gallon briefly before heading back up to $2.50 the following summer.

Dehaan predicts gas prices this year will peak around $4.15 a gallon in May and then begin to decline.

Other experts are predicting that consumers could see $5 a gallon gasoline for the first time in 2012.

Dehann said factors driving up prices include speculators purchasing large amounts of crude oil futures, an improving economy which creates increased demand for fuel and OPEC’s unwillingness to pump more oil.

Economist for Elliott D. Pollack and Company Jim Rounds said he expected prices to increase as the global economy recovers, but that the rate of gas price increases is outstripping the rate of the economic recovery.

“If prices do reach $5, there is no way that would be based off pure economic recovery,” he said

Economic Impact
Maricopa is a town of commuters. According to a 2008 survey published by the city, approximately 84 percent of employed Maricopans commute 32 miles roundtrip or more daily, and 53 percent commute a minimum of 60 miles roundtrip each day.

In the Hutson family, Ric drives about 40 miles each way, to and from his job in Scottsdale, while Judi periodically drives about the same distance for consulting work she does in the Valley.

“We drive a Prius, which is very gas efficient, but if prices climb above $4 I don’t know if we can afford to continue living in Maricopa,” Judi said.  “We are barely getting by as it is.”

The Hutson family isn’t alone in its concerns.

Jim Valenzano, who owns a home in Rancho El Dorado and commutes around 70 miles roundtrip each day, said he wouldn’t be able to maintain his current employment if gas hits $4 and would have to consider giving up his house.

“It is pretty tough at $3 a gallon, but $4 a gallon would be killer,” he said. “Combined with the high utility prices $4 gas could will help Maricopa become a ghost town.”

Maricopa resident Michael Sabo, who works locally, said he thinks the return of $4 gas would be much worse then what Maricopans went through when gas prices peaked at slightly over $4 two and a half years ago. 

“For a lot of families it is going to take food off their tables,” he said. “This is not only going to affect the residents of Maricopa, but the businesses too.”

Rounds said he agrees that increases in gas prices will have significant effects on households and the economy.

“Anytime you take money out of the state it is not a good thing,” he said.