03:14 PM EDT on Tuesday, April 5, 2005

Frank the Moderator: Gasoline prices in Rhode Island have leaped above $2 a gallon and are on the brink or reaching a new record. While consumers dig deeper, the energy companies are posting big profits. What's a consumer to do? Chat online with Business staff writer Timothy C. Barmann about rising gasoline prices on Tuesday at 2 p.m.

Frank the Moderator: Hey all -- please submit your questions for Tim , he'll log in around 2 to start posting responses.

what a gas: Tim -- I understand that the cost of living continues to rise, and making ends meet is difficult for most folks. But don't you think that instead of fretting over the price of gas, we should find other solutions to our transportation problems. I feel we should work on better fuels; city and communities that are smartly planned; and better public transportation in all cities. I don't care if gas goes to 5 dollars a gallon, I want smart cities and responsible citizens. Thanks Tim
Timothy Barmann: Hi - I agree that we should continue to work on better fuels, such as biodiesel, made from - believe it or not - restaurant grease, and ethanol, made from corn. It will take a significant amount of time and investment for these fuels to gain wider use. It's happening, but rather slowly at the moment. Better public transportation systems would certainly help cut back on fuel consumption. However, transit systems in some places, included Rhode Island, don't seem to be nearly as widely used as they could be. This is not my area of expertise, but I understand that the fares RIPTA charges are well below the actual cost of bus service. It would be hard to get more funding to expand RIPTA when people today don't take full advantage of it.

Samdaddy: Can you explain the economic impact of gas prices beyond what it means to the everyday commuter?
Timothy Barmann : I'm not sure I understand your question exactly. Perhaps you are refering to the effects of high gasoline prices on other aspects of the economy. That's a difficult question to answer. I know that economists are watching what's happening to gas prices and the ripple effect they might be having. Few alarms have been sounded so far, and one of the reasons is that our economy relies less on oil than it did, say, in the 1970s. But higher gas prices will, sooner or later, translate into increases in other things -- air fares, groceries (higher shipping costs), plastics, and many other things.

zoldano: Tim, does hunting around for gas that is 2 or 3 cents cheaper per gallon really make a difference in the long run? What *is* the most effective way to save money on gasoline? Or shd we all just give up coffee?
Timothy Barmann: Obviously, it depends on how much you drive, and how far you have to go to find cheaper gas.
One thing you might consider is buying gasoline just across the border Massachusetts, where gasoline is often cheaper. That's mainly because of the lower state tax on gas there, as opposed to RI. RI has one of the highest gas taxes in the country. And don't discount how much you might be able to save by shopping around. AAA and the state Energy Office routinely find a price difference of 25 cents between the highest price and the lowest price at local stations. (Yesterday, AAA found a high of $2.25 and a low of $1.12 in RI.)

ld: Tim: I'm most concerned about the rising cost of fuel oil. We use more energy in the winter in the Northeast and we're at the end of pipleines and supply routes. Shouldn't we be looking for renewable sources and more supply domestically and from abroad?
Timothy Barmann: We do use an awful lot of heating oil -- about 80 percent of all heating oil used in the U.S. is consumed in New England. About 41 percent of RI households use heating oil. I agree that we should be looking to renewable energy sources, such as wind and solar, as well as conservation. But all of these require time and money. Alternative sources of energy are often more expensive than energy produced traditionally with oil and gas. Without a change in public policy, and perhaps monetary incentives for choosing green power, few people will want (or be able to) spend the extra money to get it.

FatJack: Tim, I have a long commute. These high prices are killing me. Is it time to shop for a hybrid car, or am I likely to spend more for the car than I'll save in gas.
Timothy Barmann: I talked to a friend the other day who just ordered a new Toyota Prius. He said his calculations show that even though he'll pay more for the car up front, the lifetime cost of the car will be about the same as a gas-only car. There are some new developments in hybrid cars soon to come. Some folks have "hacked" the Toyota Prius to add more batteries and provide a way to charge them up by plugging them in. They claim their prototypes can get the equivalent of 180 mpg. The savings in gasoline costs still, by far, exceed the extra you have to pay in electricity costs, according to these entrepreneurs.

Frank the Moderator: Tim -- what is the government saying about the high gas prices?
Timothy Barmann: In terms of changing public policy and offering a solution, the government has said very little. President Bush has, in the past, declined to release oil from the nation's Stategic Petroleum Reserve. Some experts believe that doing so could reduce oil and eventually gasoline prices. However, that is only a short-term solution. It doesn't address the core issue of rising demand against the backdrop of limited production and refinery capacity.

Samdaddy: $1.12!? Where was that?
Timothy Barmann: Yeah, I'd like to know too. That was a typo. :) A low of $2.12 a gallon.

Samdaddy: Does the average station owner really watch futures trading when setting gasoline prices? Or is the price much more corporately driven?
Timothy Barmann: The local gas station owners I have spoken to absolutely watch the price of gasoline very closely. Some have trading screens to help them monitor even more closely. But they have little control over gasoline prices. They have to pay whatever the wholesale price is at the time of their delivery. Many station owners say that the high prices hurt their profit margins. Prices really aren't corporate driven - they are based on market prices, much like stock prices are set by trading on the stock exchange.

Mary-Warwick: Hi Tim. Does gas consumption decline when gas prices increase? Or do we guzzle the same amount no matter what the price is at the gas pump?
Timothy Barmann: I asked that very question to an energy analyst at the government's Energy Information Administration yesterday. He said that so far, it appears that gas prices have not put a dent in consumption. The Goldman Sachs report, which I quoted from in my story, suggested that for Americans to change their driving and car-buying behavior, gasoline would have to hit $4 a gallon. The reason, they said, is because gasoline is still a relatively small percentage of consumer spending. It's far below what it was back in the 1970s.

Frank the Moderator: In your story, you write that the new summer forecast will be released on Thursday. Are they (I believe the Energy Information Administration) going to predict high summer gas prices.
Timothy Barmann: As much as a tried to sweet-talk the analysts I spoke to at the Energy Information Administration, they wouldn't tell me what their forecast for this summer was going to be. In fact, they said it was still in flux because of the recent spike in crude oil prices. I simply don't have the answer for you.

Frank the Moderator: Talk a little on what you and The Journal are planning on to follow the gas prices story.
Timothy Barmann : What do you think we should do?
Timothy Barmann: What sort of stories do you think we should be doing?

Frank the Moderator: How can I find the best gas prices around town?
Timothy Barmann: There's a Web site called gasbuddy.com which allows people to post the price of gasoline from their neighborhood gas stations. The site does have a section for Rhode Island prices. I just checked, and the lowest price listed was a Hess station in West Warwick at $2.02 a gallon. That was yesterday morning, so the price may have gone up since then. Keep in mind that the prices are posted by the site's visitors, so they may not be accurate. Also, I often try to buy gas at a station that offers a discount on a particular day of the week.

zoldano: Tim, I'd really like it if you could come up with some kind of gasoline calculator, like that one you did recently to help calculate how much we spend on fuel oil. Is that in the cards?
Timothy Barmann: Great idea. That would be fun to do. Thanks for the suggestion.

Frank the Moderator: Thanks Tim for offering some thoughts and tips on these high gas prices.
And thanks to everyone who stopped in.