DRIVERS DIG DEEPER AS PRICES RISE

Modesto Bee

As gasoline prices headed toward $3 a gallon, Teresa Garcia of Modesto was bracing for the hit on the family budget.

At that price, she and her husband, who commutes to work in Fairfield, will spend $150 to $200 a week for fuel, she said.

“I stay at home, and I’ll go through $50 a week myself,” said Garcia, while buying gas for her sport utility vehicle Sunday at the Quik Stop at Burney Street and La Loma Avenue. “I would take public transportation, but in Modesto you can’t get anywhere taking the bus.”

The average price per gallon in California shot past $2.80 this week, the result of rising consumption, a fresh surge in crude oil costs and a host of planned and unplanned refinery outages, including a fire at an oil refinery in Texas.

San Francisco’s average price hit $3.01 a gallon last week, the highest of any major market in the state, and analyst Denton Cinquegrana predicted the rest of California could hit $3 soon. Consultant David Hackett of Stillwater Associates in Irvine said he thinks prices will go up an additional 5 cents or so.

Gasoline was selling for just over $3 a gallon for regular at some stations in Modesto, but as of Sunday, the average price was $2.88, which is 35 cents higher than a month ago, according to AAA.

The average prices were $2.91 in Stockton and $2.96 in Merced.

Cinquegrana said Californians are unlikely to repeat the roller-coaster experience of last year, when prices hit a record $3.38 in May and then tumbled nearly $1 in the next five months.

But California’s gas supply remains precarious. Analysts said gas production was hurt by a January fire at Chevron‘s Richmond refinery and a glitch last week at ExxonMobil’s Torrance plant.

At the same time, California refiners have been wrapping up planned maintenance projects and going through the annual late winter conversion to summertime fuel blends, which are costlier to make. That puts an added squeeze on production.

THE SPREAD HAS GOTTEN BIGGER

Tim Dodge, a self-employed delivery driver in Modesto, said the rising prices put a squeeze on his business. He said he was selling recycled paper to earn extra cash –and it was all going into his tank.

Dodge said he doubted the price increases are because of supply shortages. “The oil companies are making record profits and people like me are going out of business,” he said.

Rossen Townsend, who is moving from Sonoma County to Modesto, said the price increases are predictable.

“It’s typical that the price of gas goes up when the weather is conducive for going on vacation,” he said. “It always follows the ebb and flow of what the market will bear.”

California prices have risen more quickly than in the rest of the country. The traditional spread of 20 cents to 30 cents, caused in part by California’s tougher fuel specifications, has grown to 46 cents.

Two other factors are leading to higher prices, in California and across the country.

The price of crude oil has risen about $10 a barrel in the past six weeks. And motorists are putting more upward pressure on prices. For the four weeks ending Feb. 16, gas and diesel consumption was up nearly 4 percent from a year ago, according to the U.S. Department of Energy.

One consumer advocacy group, Santa Monica’s Foundation for Taxpayer and Consumer Rights, called this week for “immediate action by Congress and California lawmakers to regulate gasoline supplies and curb price gouging by oil companies and refiners.”

The foundation added, “If oil companies won’t increase their refinery capacity and gasoline storage in the state, government must do it.”

But industry spokesmen said California’s high prices are the result of legitimate supply constraints that can’t easily be remedied.

California’s unusually tough, hard-to-duplicate fuel formula, designed to reduce air pollution, makes it difficult to find replacement supplies when one of the state’s 14 refineries suffers a problem, they say. And government red tape has hindered efforts to increase refining capacity in the state, said Joe Sparano, president of Sacramento-based Western States Petroleum Association.

Even at the wintertime prices, gasoline costs are a problem for the elderly, said Virginia Head of Modesto.

She was making daily trips to Kaiser Manteca Medical Center and Emanuel Medical Center in Turlock when her 70-year-old husband was hospitalized in December, she said.

While recovering from a stroke, he spent 10 days in a Modesto nursing home. She and her daughters were making three crosstown trips a day to the nursing home to help feed him and sit with him.

“We were going through the gas like crazy,” she said.

Jessie Galvez, 27, of Modesto, said the prices make him want to replace his Ford Mustang GT with a gas saver. But he probably won’t go that far.

“You feel it in the pockets, but if you are working you have money coming in,” he said, after topping off his gas tank Sunday.
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Bee staff writer Ken Carlson can be reached at [email protected] or 578-2321.