Gasoline's Not So Peachy Down South

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Gasoline's Not So Peachy Down South

NEW YORK -- Drivers in much of the Southeast probably have a hard time believing reports of retreating or stable gasoline prices around the rest of the nation, CNN/Money reported.

In Thursday's AAA daily gas price report, prices fell in New York, California and Massachusetts, yet the average price of a gallon of regular unleaded in Georgia was up nearly 3 cents, with the price in the Atlanta area jumping nearly 5 cents. The average prices in those markets -- $2.780 in Georgia, and $2.788 in Atlanta -- are still below the AAA national average of $2.815, which was up 0.4 cent from the day before, according to CNN/Money .

CNN/Money reported that prices increased more than a cent a gallon on average in Florida and Alabama, according to AAA, and the average price was up about 2 cents a gallon in Louisiana and Mississippi, two states still struggling to recover from the damage done by Hurricane Katrina.

But while those states are seeing increases, about 80 percent of the states saw prices either decline, stay steady, or rise by less than a penny. Arizona saw the average price fall by nearly a full cent to $2.916, although that was still above the national average, according to CNN/Money .

According to officials with AAA, the problem is a combination of supply disruptions still remaining from hurricanes Katrina and Rita, coupled with some unique market psychology in different metro areas, according to the report.

Part of the run-up in Georgia gasoline prices is due to the fact that a state 15-cent a gallon gasoline tax that was suspended following Katrina is due to resume Saturday. Gregg Laskoski, spokesman for AAA Auto Club South, told CNN/Money that gas tax could be causing people to top off their tanks this week to avoid paying more tax, and that in turn can prompt stations to raise their prices.

While some might call those price hikes "gouging," national AAA spokesman Geoff Sundstrom told CNN/Money that it makes some sense for station owners to try to raise prices now to stop a run that could drain their pumps this week.

He told CNN/Money that stations that run out of gas lose the customer that is now typically buying milk, soda or other items at the convenience store part of its operations. About 80 percent of the nation's gas stations now include those kinds of convenience stores, and those sales now are more crucial to a station's profits than the gas sales.

"A lot of guys make more money on selling beer, cigarettes, milk and eggs," he said in the CNN/Money report. "They don't want to underprice the surrounding market and possibly run out of gasoline. That's the worst thing that can happen to most of them."

The Charlotte Observer reported similar price spikes in the Charlotte region. Gas prices soared past a record Tuesday at $3.12 a gallon, a level well beyond those after Hurricane Katrina. At one point after Katrina, Charlotte-area drivers were paying $3.50 a gallon or more for regular, reported the The Charlotte Observer .

Oil companies have helped keep prices below $3 by charging wholesalers and stations less than the Gulf Coast price since Rita struck Saturday, according to the report

Wholesale futures prices rose on growing worries about tightening gas supplies from 16 refineries closed and damaged after Rita. None have restarted. In addition, the pipeline that provides most of Charlotte's gas was operating at a little more than half capacity, the The Charlotte Observer reported.

The Pantry convenience store chain, based in Sanford, planned to place signs on Wednesday at its 1,400 stations asking motorists to limit their fill-ups to 20 gallons, company president Peter Sodini told The Charlotte Observer .