PHILADELPHIA (CBS) — While the protests in Egypt are thousands of miles away, they could very soon impact what millions of Delaware Valley drivers pay at the pump — and how much all of us pay for a range of items from food to services to taxes.
Already, gas prices in many parts of the Philadelphia region are over $3.00 per gallon, but that could be just a prelude of what’s to come if the unrest in Egypt spreads to other Middle Eastern countries.
On Monday, crude oil prices on the New York Mercantile Exchange closed over $92 per barrel. That’s up from the mid-$80s just late last week, and it’s the highest price in two years.
“There’s absolutely a fear premium in there,” says Stephen Schork, who produces the daily Schork Report, advising companies and investors on purchasing oil and gas. “How high can we go? Well, markets in London are already trading at $100 a barrel, and we’re only at $91.50… We certainly can get to $100 per barrel at this point.”
That would mean average national gas prices of $3.30 per gallon or more. An Eyewitness News camera already found regular unleaded gasoline at $3.29 in Conshohocken.
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While Egypt does not produce much oil itself, four million gallons of crude pass through the country everyday either on the Suez Canal or Suez-Mediterranean pipeline. And investors are worried about what might happen to the oil supply should protests expand to more oil-rich countries like Saudi Arabia. That could mean a tremendous spike in gas prices which could stall the slowly-recovering economy. (Complete Coverage Of Egypt In Crisis)
“People will spend money, but they’ll spend it on energy,” Schork says. “They won’t spend it elsewhere in the economy.”
“It’ll kill us. It’ll kill work. It’ll kill everything we’re doing,” says Scott McFarland, who runs the waterproofing company Basement Services. He has 25 trucks and spends $160,000 for gasoline each year. A $1 per gallon price increase could cost him upwards of $25,000 or $30,000, hampering his ability to grow his business.
It’s something school districts are watching closely as well. All across Southeastern Pennsylvania, districts are putting together next year’s budgets now and are trying to guess how much they’ll pay for bus fuel next year.
Not setting aside enough money now could mean “cuts in services” later, says Burt Blackburn, the Director of Transportation in the Radnor Township School District.
This year, diesel fuel costs his district $2.50 per gallon. That is a steady rate negotiated by the Delaware County Intermediate Unit. But Blackburn is betting it could rise to $3.50 next year.
“That would mean $90,000 more just for the fuel,” he says.
And that will only complicate what is already a very difficult budget year as school districts could also see substantial cuts from new Gov. Tom Corbett’s budget.
Reported By Ben Simmoneau, CBS 3