Phoenix, Ariz., January 8, 2009. Across the state and country, motorists still getting used to the thought of 2009 are also getting reacquainted with the thought of paying more to fill their tanks, as the price of gasoline strengthens for the first time in 15 weeks. Statewide, motorists are paying an average of $1.660 for a gallon of regular unleaded gasoline, an increase of 6.7 cents from last week and the first time prices have experienced a week-over-week increase by more than a nickel since mid-June. East Valley drivers continue to pay the state’s lowest fuel price at $1.572 per gallon, while Flagstaff drivers are paying the most for fuel in the state with an average of $1.843 per gallon. The national average for fuel is currently $1.762, which is an increase of 14.5 cents from last week.

This week, geopolitical tensions in the Gaza strip, Russia's energy dispute with Ukraine and a pipeline explosion in Nigeria have resulted in an upswing in the price of crude oil and wholesale gasoline costs, thereby elevating both the state and nationwide retail price for fuel. However, it is important to point out that after rising to nearly $50 per barrel earlier this week, the price of crude oil has fallen back to the low $40 per barrel range on news of the continued weakened economy and figures which revealed a strong increase in crude oil and gasoline supplies from the Department of Energy.

“While the economic outlook, which has shaped fuel prices for the last several months, continues to be bleak, continued geopolitical conflict has added volatility to the market, which the price reversal we experienced at the pump can largely be attributed to this week,” said Linda Gorman, public affairs director for AAA Arizona. “Interestingly, the price of crude oil has since dipped dramatically. Looking ahead, should geopolitical tensions wane and the price of crude stabilize at current levels, it would likely limit the current influx we’re experiencing at the pump. However, should tensions continue or escalate, we could continue to see the price of the commodity fluctuate, as we experienced this week, which would likely result in continued pump price escalation.”

Another factor that could result in increased pump prices in the future is a proposal to increase the federal gas and diesel prices in order to help build and repair highways across the country. The proposal was made by a federal commission, created by Congress, and is anticipated to present a full report, in which is will urge Congress to increase the gas tax by 10 cents per gallon and the diesel fuel tax by 12 to 15 cents per gallon, later this month. Currently, federal taxes for gasoline and diesel fuel are 18.4 and 24.4 cents respectively.  

“AAA recognizes that additional revenue is necessary to meet the nation’s growing transportation demands and we will continue to look at funding options with an open mind,”  Gorman said. “ Whether it’s a gas tax increase, a new vehicle miles traveled tax, tolls or other financing tools, they all must be carefully evaluated as to their ability to be efficiently implemented, accepted by the public, allocated fairly, fully dedicated to transportation needs, and be resistant to fraud and evasion.”

The cheapest gasoline in the lower 48 states can be found in Wyoming, where unleaded regular is $1.439 per gallon. Michigan motorists are paying the most for fuel in the country with an average of $1.947 per gallon.

Motorists can visit www.AAAAZ.com/news/fuelnews.htm for fuel price information and gas saving tips or go to www.AAA.com/fuelfinder to locate the station with the cheapest gas in their neighborhood. They can also visit AAA’s Fuel Cost Calculator at www.fuelcostcalculator.com, which can help drivers plan out their fuel costs so they can budget their travel expenses in advance.

*The BTU-adjusted price of E-85 is the nationwide average price of E-85 adjusted to reflect the lower energy content as expressed in British Thermal Units - and hence miles per gallon - available in a gallon of E-85 as compared to the same volume of conventional gasoline. The BTU-adjusted price calculated by OPIS and AAA is not an actual retail average price paid by consumers. It is calculated and displayed as part of AAA's Fuel Gauge Report because according to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because "flexible fuel" vehicles can operate on conventional fuel and E-85, the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.

AAA Arizona’s Weekly Fuel Gauge includes data from gasoline stations in every Arizona community. However, only major metropolitan areas are shown in the table above.  Local prices in some communities might be higher or lower than the averages shown here.

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NOTE: AAA Fuel Gauge data may be used on a daily basis by news media Web sites, but should include attribution to AAA.