Durango gas prices have spiked by almost 25 cents over the last week.

Durango prices hit an average of around $4.02 per gallon as of Monday, which Fort Lewis College Associate Professor of Economics Nate Peach attests to a culmination of factors.

He said that the Organization of the Petroleum Exporting Countries has cut back on oil production. Production in June among the OPEC nations that are required to limit output fell by 10,000 barrels per day.

Other factors include increased summer travel demand and U.S. oil refineries cutting back on production because of extreme heat in the southern states.

Extreme heat prevents oil refineries from running at full capacity, meaning there is a limited supply for an elevated demand in the summer. With that in mind, Peach still thinks the conflict in Ukraine is impacting gas prices as well.

“The United States and Western Europe have gone through a lot of effort to try to penalize Russia's oil sector. And inevitably, those things have led to higher prices at the pump,” Peach said.

Fuel prices are still recovering since the city experienced record breaking gas prices during summer of 2022 where prices reached $5.06, in part as a result of the United States’ involvement in the conflict in Ukraine.

On March 8, 2022, President Joe Biden signed an executive order banning the importation of Russian crude oils into the U.S. in order to hinder Russia’s economy. In 2021, the U.S. imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia, according to data provided by White House’s website.

Peach added that increased gas prices in Southwest Colorado are exacerbated by an overall lack of competition. There could be up to 50 gas stations in larger urban areas, whereas in Durango there’s only 16. There are even fewer gas stations in towns like Cortez, Bayfield and Pagosa Springs.

With less competition, Peach said this allows gas stations to price at a slightly higher rate, especially when Speedway and Marathon make up most of the Durango market.

“I'm not suggesting that they're manipulating pricing or anything like that. But when there's only so many gas stations in town compared to 50 (in urban communities), the economics kind of lean toward higher prices,” Peach said.

Durango gas prices have escalated by 10% in the last month.

Southwest Colorado prices are well above the national average of $3.76 per gallon, according to AAA. La Plata County as a whole matched Montezuma County in average gas prices at $3.99 per gallon, while Archuleta County is sitting at just over $4 per gallon.

For La Plata County, week-to-week fluctuations in gas prices do not impact the county’s overall budget. La Plata County spokesman Ted Holteen said the prices won’t impact the county until Fiscal Year 2024 when it’s time to budget for fuel again.

The county road and bridge department and the La Plata Sheriff’s Office are consistently among the greatest consumers of fuel, with 2023 budgets of $638,300 and $163,439, respectively.

Both departments experienced increases in their fuel budgets since the 2022 budget. The sheriff’s office experienced a 20% fuel budget increase from its 2022 budget, while road and bridge had around a 37% fuel budget increase, indicating the county has been accounting for increased gas costs.

Holteen said budgeting fuel expenses is based on how much was spent in previous years and department projects that require fuel.

In the city, Durango Transit and the Durango Police Department are among the heaviest users of gas. The city’s 2023 adopted budget set aside $139,200 in fuel costs for the police department and $200,000 for Durango Transit.

From a tourism standpoint, downtown businesses are lucky that the rising prices are coming near the end of the summer tourism season, said Business Improvement District Executive Director Tim Walsworth.

“Families are probably the most price conscious and increase in gas prices could make them change their mind about where they might go,” Walsworth said.

With school starting in just a few weeks, tourist activity will start to dwindle by the second or third week of August, he said.

However, summer tourism has been down this year based on what Walsworth has seen. He’s still awaiting sales tax data from the city. Anecdotally, downtown store owners have told him there were fewer people shopping in June.

This contrasts to last summer where gas prices hit an all-time high in Durango, but Walsworth said businesses saw a higher amount of traffic in June. He credits this to the pent-up travel demand created by the COVID-19 shutdowns.

“We're getting into our new normal, we're just not exactly sure what that is yet,” Walsworth said.

Jet fuel prices have also escalated recently. Durango-La Plata County Airport Director of Aviation Tony Vicari said prices have soared 18% over the last two weeks.

For most airlines, fuel makes up 20 to 35% of airfare costs, Vicari said, meaning travelers will likely see a bump in ticket costs.

“Most of it is the commodity market. We see that just play out with oil prices on the worldwide trading sector. So as the commodity market drives up pricing for a resource like oil, that gets reflected out to any level of refinement, and in particular, jet fuel,” Vicari said.

While Vicari said unleaded fuel expenses account for a very small percentage of the airport’s budget, it can impact consumer actions. Gas expenditures will often eat into the average person’s discretionary spending making them less likely to fly.

“We haven't seen that play out in 2023 so far. This year has been very busy at the airport, and traffic is up about 12%,” Vicari said.

tbrown@durangoherald.com