AAA Reports Oil and Gas Prices Volatile Due to Possible Interest Rate Hikes

BURNSVILLE, Minn., May 16, 2006 -- AAA reports that the current nationwide average price for self-serve, regular unleaded gasoline is $2.934, the highest price reached this year. This is more than 17 cents higher than last month's $2.761 price, and more than 77 cents higher than last year's $2.162.

Turmoil in the world's financial markets during the last few days is creating extreme volatility in the prices of many commodities, including oil and gasoline. These price movements are mostly associated with investor uncertainty over the direction of monetary policy by the world's central banks.

"Oil prices recently declined -- from an all-time record of $75.35 per barrel on April 21 to $69.41 yesterday -- because commodity traders became nervous about the possibility of more interest rate hikes, and whether their price and demand expectations for oil and gasoline were too high," said Dawn Duffy, AAA Minneapolis spokesperson. "A mild economy slowdown caused by higher interest rates probably won't affect demand and pump prices could remain high; however, should a more aggressive policy be adopted by the banks, economic growth could slow more dramatically and cause both oil demand and prices to fall."

Reports for May 16, 2006, reflect the following average prices per gallon for self-serve, regular unleaded gas:

                       Current     Month Ago     Year Ago
    National            $2.93        $2.76        $2.16
      Iowa              $2.78        $2.68        $2.05
   Cedar Rapids         $2.84        $2.69        $2.03
    Davenport           $2.83        $2.67        $2.07
   Des Moines           $2.69        $2.68        $2.04
   Sioux City           $2.80        $2.67        $2.09
    Waterloo            $2.78        $2.66        $2.01

AAA's Fuel Gauge Report is based upon data from the Oil Price Information Service, the nation's most comprehensive source of petroleum pricing statistics, and can be found at http://www.fuelgaugereport.com/ .

AAA ( http://www.aaa.com/ ) offers automotive, travel, insurance and financial services to more than 49 million members in the United States and Canada. AAA Minnesota/Iowa is part of The Auto Club Group, with 4.1 million members in eight Midwest states.