Gas prices soar again No relief in sight : LUSENET : TB2K spinoff uncensored : One Thread


Published Saturday, September 9, 2000, in the San Jose Mercury News

Gas prices soar again No relief in sight as average cost hits $1.92 a gallon in San Jose On the books:


Traveling through Silicon Valley in search of cheap gas on a warm Friday: $1.97, $1.87, $1.95, $1.99.

Gas prices reached an all-time high in the Bay Area on Friday, hitting an average of $2.01 a gallon for self-serve unleaded in San Francisco and $1.92 in San Jose, according to a sampling by the California State Automobile Association. That's 2 to 4 cents higher than the previous highs set in July.

Pump prices have risen as much as 28 cents a gallon in the past three weeks at some stations, and the run-up has motorists reeling and energy officials urging people to carpool or stop driving. One independent company even is advising station managers to stop selling the costly fuel, because they aren't turning a profit despite these prices.

No matter what station one turns in to, prices are high. Rotten Robbie gas suddenly costs more than Shell's. Beacon is now more expensive than Chevron.

If you can find gas for $1.87 (try the ARCO stations on Winchester Boulevard in Campbell and West San Jose), fill 'er up. That's what goes for a bargain these days.

``Prices are the same everywhere,'' groaned Dottie Tarvin of Fresno, who was filling her rented white Mustang for $1.89 a gallon at the Gas Depot on Winchester Boulevard after a day of training bankers in the South Bay. ``Nobody is cheap anymore. It's bad.

``If my company wasn't paying for this, believe me, I would not be driving to the Bay Area.''

Analysts say what they've said at other times when skyrocketing prices have left us numb:

High prices are the result of soaring crude oil costs, up to $34 a barrel this week -- a 10-year high and triple the cost of three years ago.

Refiners have reduced production -- inventories in California are down 17.5 percent from a year ago. Refineries sell gas first to their own stations, and independents like Rotten Robbie pay inflated prices for whatever is left over.

And the motoring public still loves sport-utility vehicles that can inhale a gallon of gas every nine to 12 miles. That recipe has sent prices surging again on the California spot market, where independent stations buy their gas. Wednesday they were paying an unheard of $1.65 a gallon, although it dropped to under $1.50 by late Friday. Add in about 50 cents a gallon in taxes and trucking costs, and it translates into at least two bucks a gallon at the pump before any profits.

Making tough choices

That was too steep for B.H. Rhee, manager of the Gas Depot across the street from the Town and Country Shopping Center on Winchester Boulevard in San Jose. On Sept. 1, he faced a choice as a tanker delivered its shipment with the higher fuel bill: Raise prices to $1.95 a gallon or refuse to buy the gas. He shut off the pumps and up went ``NO GAS'' signs at his station.

``It was just too expensive,'' said Rhee, who only began selling gas again Thursday, nearly a week later. ``I was determined not to insult my customers by charging them $1.95 or $2 and then only break even. It was kind of a one-man protest.''

Independent retailer USA Petroleum Corp. copied Rhee's lead, as it temporarily stopped selling gas at nearly half its 100 California stations when wholesale costs soared.

``The world is upside down,'' said Jerry Cummings, co-owner of Coast Oil, which operates the areas's Rotten Robbie stations. He estimates some of his stations have lost 38 percent of their business since they've had to raise their prices to higher than the major brands' prices.

Cummings figures he should be selling gas for $2.10 a gallon to make a few cents profit. But he knows that would empty his stations pronto.

``It's not pretty when you lose money,'' he said.

Coast Oil trimmed prices by 6 cents Friday morning, hoping to lure back lost customers. And owner Rhee said he might drop prices another dime to get his customers to return.

But it's a gamble. A Saudi Arabian promise to boost production prompted a drop in crude costs Friday, but supplies remain tight and prices could remain volatile.

Expensive winter

``There are certain energy analysts who are not optimistic at all,'' said AAA spokeswoman Bronwyn Hogan, noting that some predict crude costs could hit $40 a barrel by winter. ``They are not seeing any decline in prices, be it crude oil or heating oil. Basically, they are telling people to prepare for a pretty expensive winter.''

Bay Area gas prices have led the state for several years, but this time we're not alone. Bakersfield reports in at $1.92, Sacramento at $1.90 and San Diego at $1.82. Los Angeles, however, is again cheaper with an average price of $1.67 a gallon.

And if you want a gallon of premium, the windshield cleaned and the oil checked, dig deep. At the Shell station at Bascom Avenue and Hedding Street, that cost you $2.47 a gallon Friday.

-- S.V. Guy (When@oh.when.CPR?), September 10, 2000

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