Gas prices, anger march in lock step

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Oakland Tribune (California)

Bay Area gas prices jumped another 14 cents a gallon in the last month and the national average reached a record high Tuesday, prompting cries of outrage from consumers and a call for a congressional investigation. But some relief may be in the offing.

A gallon of regular unleaded gasoline jumped to $3.61 in the Bay Area, higher than the state average of $3.48 and 52 cents above the national average of $3.09 — itself a record-breaker.

Average gas prices were up 8 cents in the past month to $3.37 a gallon in Tracy, up 13 cents to $3.54 in Oakland and up 15 cents in Fremont ($3.48), San Mateo ($3.56) and Pleasanton ($3.58), according to AAA. San Francisco had the nation’s most expensive gas among cities tracked by AAA, at $3.69 a gallon.

California fuel costs have increased 31 percent in 2007, the organization noted. In testimony Tuesday before the U.S. Senate Committee on Energy and Natural Resources, Geoff Sundstrom, AAA‘s public affairs director, asked Congress to investigate high gas prices.

Meanwhile, experts predicted relief is in sight for two reasons. Shipments of gasoline are coming to the state from the Gulf Coast and the Caribbean, and refineries are coming back online after a fire in Chevron‘s

Richmond facility and downtime during the switch to summer gas.

The quick rise in prices this year leaves many consumers — not to mention their bank accounts — seeing red.

“Somebody’s getting rich,” said Tom Might of San Francisco. “The oil companies are posting big profits — billions in one quarter. We need to get off oil somehow.”

Echoing Might’s sentiments, “I really hope we start looking toward alternative energy sources,” said Susan Urbanski of Oakland. “We’re a nation of inventors; let’s do it.”

Price relief may take a few weeks.

“Most likely, gas prices will stay at $3.61 and then start to drift down in another month, or sooner,” said Severin Borenstein, director of the University of California Energy Institute. “It depends on how quickly the shipments arrive and how quickly the refiners start back to full production.”

When California refineries change to cleaner-burning summer gas, the supply of gas temporarily goes down, sending prices up. That period is ending, Borenstein said.

“The good news is that the financial markets are predicting gas prices will fall by 20 cents a gallon over the summer,” said Christopher Knittel, a faculty member at the Institute of Transportation Studies at UC Davis.

Consumers, however, were dubious.

“They say (high prices) are because the refineries are running low, but I think it’s because there’s high demand and the oil companies can charge as much as they want,” said Heather Laubscher of San Leandro.

“It’s outrageous. It’s ridiculous,” said Fred Graham of San Lorenzo. “There was talk of a boycott of gas today, but that’s not going to do anything to Big Oil. We’re hooked on gas in California. Gas is more expensive here in the Bay Area than in Hawaii.”

Graham commutes to work on BART.

In asking Congress to investigate the increases, AAA, North America’s largest motorist organization with more than 50 million members, raised a number of possible solutions, including asking motorists to reduce consumption.

This goal may be tough to achieve. In April, weekly gasoline demand increased as much as 1.9 percent compared with the same period in 2006, even though the average national price of a gallon of gas rose from $2.71 to $2.97 by the end of April, The Associated Press reported.

When U.S. prices jumped to $3.05 a gallon in the first week of May, consumption dipped — by just two-one hundredths of a percent, U.S. Energy Information Administration figures showed.

AAA also told Congress that governments must commit to higher vehicle fuel economy standards and work with the private sector to develop alternative fuels; a minimum level of mandatory refined product of gasoline inventories should be established; more planning should be done for fuel in crises; and a smaller
number of fuel blends should be used.

Oil industry representatives attribute rising prices to market forces.

“We understand that when prices go up in the manner they have this spring, people want answers,” said Tupper Hull, a spokesman for the Western States Petroleum Association. “For the last several years California’s Energy Commission has made it crystal clear that California’s limited supply of gasoline and diesel and its isolation from other sources of transportation fuel has led to and is continuing to produce extreme volatility in the marketplace.”

More refineries would make it possible to produce more gasoline, he said.

“We can only hope that AAA will join our industry in urging the various public bodies that issue permits to expedite and streamline permitting processes so we can produce more fuel to meet the state’s increasing demand.”

The news that AAA is calling for an investigation is significant, said Jamie Court, president of the Foundation for Taxpayer & Consumer Rights, a consumer advocacy group.

“When AAA calls for an investigation, even the Republicans must start to think there’s a dysfunctional market here,” Court said. “There’s no reason prices should go up 14 cents in a month when crude oil prices are stable.”

Crude oil costs about the same now as it did last year, yet gas prices are higher, Knittel said.

“In general, across the country, gas prices are high today relative to last year almost all because of differences in refinery margins, not crude oil prices,” Knittel said. “Firms are making the decision to withhold gas from the market so the price goes up.”
Contact Janis Mara at [email protected] or (510) 208-6468. Read her Energy Blog at

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