Gas price nears record

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San Mateo County Times

The average price of regular unleaded gasoline on the Peninsula and in San Francisco hit $2.27 a gallon Thursday, a penny short of the all-time record set before the war in Iraq in March 2003, according to AAA of Northern California.

And the outlook is for even higher prices in the coming months.

The latest uptick in prices ends a trend of slow declines that had been in place since early March. Statewide, average prices hit a new record of $2.20 a gallon for regular unleaded, according to AAA.

“There doesn’t seem to be any evidence that we’re going to see a big drop anytime before the end of the summer,” said AAA spokesman Sean Comey. “It’s more likely to go up than down.”

Also Thursday, the federal Energy Department predicted in a report that nationwide gasoline prices will average $1.76 a gallon over the summer, about 20 cents higher than last year. The report blamed high crude oil prices, growing demand and a transition from the polluting fuel additive MTBE (methyl tertiary butyl ether) to corn-based ethanol.

One expert, oil economist Philip Verleger, has predicted that California’s gasoline prices could rise as high as $2.50 a gallon this summer.

Late last week, unexpected problems at California’s refineries pushed up wholesale gasoline prices. But experts said those wholesale prices have already declined.

“Supplies are loosening up again,” said Rob Schlicting, spokesman for the California Energy Commission. “Perhaps we’ll start seeing a subsequent drop at the pump.”

Tom Kloza, chief oil analyst for New Jersey-based Oil Price Information Service, said gasoline prices are so high in California that oil refineries around the world are able to profit by sending supplies of gasoline here.

“There’s a lot of gasoline on the way,” Kloza said. “I think you’re going to see decreases in the next 30 days.”

As consumers feel the sting of high prices, Shell Oil’s decision to close a Bakersfield refinery this October is coming under fire. This week, the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based consumer group, released internal Shell documents that show the Bakersfield refinery has been among the company’s most profitable this year.

“They want to close it to drive up the price of gas,” said Jamie Court, president of the consumer group. “They’d rather sell gas at three dollars a gallon, even if they’re selling less.”

Shell spokesman Cameron Smyth said that “any accusation or assertion that Shell is closing the refinery to either drive up the price or restrict supply is absolutely false.”

He said the refinery was not profitable for two of the past three years and crude oil production has been declining in the Bakersfield area.
Alan Zibel may be reached at (510) 208-6414 or [email protected]

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