'Perfect storm' of issues raises S.D. gas prices18 cents in a mo - KOTA Territory News

'Perfect storm' of issues raises S.D. gas prices18 cents in a month

South Dakota gas prices have risen more than 4 cents a gallon in the last week. That's double the rate for the nation as a whole.

There are a number of reasons the prices are sky-high, and pretty much all of them could stick around for a while.

And that's exactly what drivers like Al Hoffman of Lemmon, S.D., don't want to hear.
 
"They went down for a little while, and all of sudden they went crazy," he said after filling his tank near Sturgis. "Up, up, up."
 
They're up almost 18 cents in the state from a month ago.
 
"What do you do?" he asked. "You gotta have it."
 
But apparently not everyone thinks so.
 
"Consumption of oil and gas, gasoline and diesel," said Rapid City-based economist Don Frankenfeld, "is actually at a four-year low" because of factors like a slow economy and increasing fuel-efficiency.

But Despite weak demand, he said, "This year we've had a perfect storm of events that have caused rates to skyrocket."
 
Things like low ethanol supplies caused by the drought, the fiery destruction of a California refinery, and concerns about the Middle East.

What's worse, some parts of the economy are really taking it on the chin.
 
"The diesel's really just taken some leaps and bounds," said Gary Lippold, co-owner of the Kick Start Travel Center outside Sturgis.
 
That means as the economy improves and companies ship more, diesel consumption goes up, taking prices with it.
 
"There was a day last week diesel went up so fast we had to change prices twice [in the] same day," he said.
 
"I don't want to use a cliché," added Frankenfeld, "but diesel really is what fuels our economy, in a literal sense."
 
And here's the rub: When the economy gets better, people buy more gas and prices go up. That causes the economy to decline.

A 10 percent bump in prices cuts the GDP by about two-tenths of a percent.

The price increase over the last month was about 12 percent.

"There's plenty of reason to worry about the effect of higher gas price," Frankenfeld said, adding that worry might not decrease any time soon.

U.S. gas supplies are very low, which means prices are very fragile.
 
To make matters worse for retailers, more people are using credit and debit cards to pay for gas.

So, Lippold says he's paying about 9 cents per gallon to credit card companies when pump prices hit these levels.
 
Click here for the lowest gas prices in KOTA Territory.