Record Prices At Gas Pumps Many Bay Area drivers paying $2 a gallon

Verne Kopytoff, Chronicle Staff Writer Wednesday, September 20, 2000

Gasoline prices have soared to the highest levels ever in Northern California, climbing an average of 13 cents a gallon in the past month, a new survey says.

In some cities in the Bay Area, a gallon of unleaded gas has climbed

past $2 a gallon for the first time. It now costs an average of $2.07 a gallon in San Francisco, $2.05 in San Mateo, $2.01 in Pleasanton and $2 in Oakland.

Drivers now pay $1.98 for a gallon of self- serve unleaded in Northern California, surpassing the previous record of $1.88 set in July, according to the report from the California State Automobile Association.

``It sucks,'' said San Francisco graphic artist Brett Critchlow as he filled up a big black Nissan Pathfinder at a Shell station in San Francisco. ``Every time I go to the gas station, it costs me $40. But maybe I shouldn't have an SUV.''

The price spike is being driven by the combination of near-record oil costs of around $35 a barrel and strong consumer demand. The surge is surprising because gas prices usually decline after the busy summer driving season.

``Certainly, driver frustration levels are high, especially because this is so unexpected,'' said Bronwyn Hogan, a spokeswoman for the California State Automobile Association. ``Prices are supposed to fall after Labor Day.''

To find a relative bargain, drivers must go outside the Bay Area. Gas is $1.94 a gallon in Sacramento, $1.91 in Tracy and $1.90 in Monterey.

Drivers interviewed at a Shell service station in San Francisco's South of Market neighborhood complained vociferously about the prices. But they seemed resigned to paying the high costs and did not consider driving less as an option.

Despite the record price, Critchlow said he will still go to the beach every day to surf. He said he is used to high prices in San Francisco for everything from rent to gas.

``I'll just pay and work more,'' Critchlow said.

Taking into account inflation, gas prices are the highest they have been since 1981. That was when President Ronald Reagan ended price controls on the oil industry and gas prices rose to $1.38 a gallon -- $2.30 a gallon when adjusted to today's dollars.

The Bay Area increase coincides with a national trend. The average gas price across the country is $1.58 this month, compared with $1.50 last month.

Californians generally pay more for gas because of a state requirement for cleaner burning fuel. Prices in urban areas in Northern California are higher still because of higher business costs and a lack of competition.

Similar gas price increases in the rest of the world have prompted consumer strikes in France and the United Kingdom. In reaction to international pressure, the Organization of Petroleum Exporting Countries agreed on Sept. 10 to increase daily oil production of 25.4 million barrels a day by 800,000 barrels.

However, Severin Borenstein, director of the Energy Institute at the University of California at Berkeley, said that such a modest boost will not have a big effect on gas prices. The only thing that can reduce prices is significantly more oil production and an increase in refinery capacity in California, both of which are unlikely in the near future, he said.

``I don't think we're likely to see much of a decline,'' Borenstein said. ``The reality is that the world economy is humming along and there is a big demand for gas.''

David Shapland, chief financial officer for a baked bean company in Knoxville, Tenn., who was visiting San Francisco, reacted stoically to paying $2.06 a gallon -- perhaps 60 cents higher than in his hometown -- as he filled a Toyota at a Shell service station.

Shapland said prices would drop if enough people refused to pay. He then added that drivers here are still much better off than in Europe. ``It's still a quarter of the price of England,'' Shapland said. Shapland was exaggerating slightly. The recent price in England has been about $4.37 a gallon.

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-- Martin Thompson (mthom1927@aol.com), September 20, 2000