_

This month is on track to have the highest gasoline prices ever seen in September, with AAA saying the average national price per gallon jumped 14 cents over the last month and bucked the trend of lower prices after Labor Day.

While paying a national average of $3.86 Monday for a gallon of regular unleaded gasoline — up from $3.83 last week and $3.72 a month ago, according to AAA — might slow the already-weak U.S. economy, it could benefit the local economy, experts said.

The oil and gas industry is among Lafayette’s major economic drivers, and likely the most important, UL geology and petroleum engineering professor Gary Kinsland said.

“I think the petroleum industry is at the top of that list dollarwise, so anything that helps the petroleum industry helps Lafayette tremendously,” Kinsland said.

Locals who have stocks in oil companies benefit when prices are high, Kinsland said, and work often increases.

“When oil prices are high, yes, it does benefit our industry in that it will create more exploration and drilling,” Louisiana Oil and Gas Association President Don Briggs said. Oil was $99 a barrel Monday and briefly hit $100 a barrel Friday.

According to oil service company Schlumberger Limited, 1,856 rigs were in the Gulf of Mexico on Friday, compared to 1,835 last week and 1,838 a year ago.

Those who question the positive economic impact of higher gas prices should look to the 1980s, when oil prices decreased significantly and hit Lafayette’s economy hard, Kinsland said.

The average price of gasoline in September over the previous five years is $3.07 a gallon.

Kinsland remembers having a conversation with a pizza delivery person who complained about the price of gas, and Kinsland told his he should not be upset over the price because it could increase disposable incomes and drive more people to order a pizza.

“High gas prices are generally good for Lafayette, but people want the economic benefit that comes with high gas prices and don’t want to pay for higher prices,” he said.

In Lafayette on Monday, the average price for a gallon of gasoline was $3.67, up from $3.65 last week and $3.55 a week ago, according to AAA Fuel Gauge Report.

That increase followed a jump of 50 cents in 60 days from early July through the end of August. AAA blamed refinery and supply problems, as well as Hurricane Issac.

Gas prices increased from the Gulf Coast to the Midwest to begin September as markets prepared for possible supply and distribution disruptions from Isaac, according to AAA. However, as concern over the lasting impact of the storm has diminished and Gulf Coast refineries have successfully restarted production.

Any lingering effects from Issac are now gone, Briggs said, who added that global supply and demand issues and unrest in the Middle East likely have pushed up oil prices.

“There is so much turmoil there that it’s a very slippery slope with delays and disruptions with the oil companies,” Briggs said, adding that 55 percent of oil used in the U.S. is imported.

Additionally the Federal Reserve last week took steps to boost economic growth, but those stimulus measures — spending $40 billion a month to buy mortgage bonds to make home buying more affordable and pledging to keep short-term interest rates near zero until mid-2015 — pushed up oil prices and could fuel inflation.

The Fed’s move can push up oil prices in several ways, according to the Associated Press. The Fed creates new money to pay for its mortgage bond purchases. That increases the amount of dollars in circulation and can lower their value. Oil is priced in dollars, so the price tends to rise when the dollar falls. That’s because it costs more for overseas investors to purchase dollars to buy oil.

Still, AAA expects the national average to decline in the coming months as demand drops off following the busy summer driving period, as refineries switch from summer-blend to less expensive winter-blend gasoline and as hurricane season draws to a close.

original article