Gasoline costs heading higher: Prices in capital area jump 11 cents per gallon in past month.

By Gilbert Chan Bee Staff Writer (Published April 11, 2001)

Higher gasoline prices are back, and energy experts say they will likely go higher before summer is over.

Sacramento-area retail gasoline prices have spurted 11 cents a gallon in the past month with consumers today paying the highest prices at the pump since November.

The average price for a gallon of regular unleaded self-serve gas stood at $1.83 on Tuesday -- just 11 cents shy of the all-time high recorded last summer, AAA reported.

Prices are expected to climb toward the $2 mark in the coming months as families take to the highways for their summer vacations and higher oil prices work through the system.

Despite efforts by some drivers to conserve, California motorists are lapping up all the gasoline the state's refineries can produce, so when driving picks up, prices do too.

"The million-dollar question is how much are (prices) going to increase," said Atle Erlingsson, a spokesman for AAA in Northern California. "We saw record travel last year. We could see it increase anywhere from 5 to 10 cents (a gallon)."

Across the country, consumers are digging deeper into their pocketbooks. In the past week, prices nationwide jumped 5.8 cents a gallon (2.3 cents in the West), according to the Department of Energy.

For California, the average price Tuesday was $1.80 a gallon for regular, up 8 cents from the previous month. In San Francisco, some motorists are paying as much as $2.19 for premium grades.

After reaching record heights in September, Sacramento's gasoline prices steadily declined before bottoming out at $1.62 in February.

Oil experts blame the latest spike on tight gasoline supplies, including low inventories at California refineries, and higher crude prices traceable to a cut in output by the Organization of Petroleum Exporting Countries cartel.

U.S. gasoline supplies had steadily dropped for six weeks before rising last week, the American Petroleum Institute said Tuesday. The API report was released after U.S. crude oil prices jumped more than 3 percent over fears that shrinking gasoline supplies may rebound to meet demands during the peak summer season.

The state's refineries produce 38 million gallons of gasoline a day. But supplies have been so tight that when a refinery shuts down for maintenance or unexpected repairs, the effects can be felt quickly by consumers. Unexpected shutdowns during the winter sent prices soaring even though demand was off season peaks.

"What are you going to do? You need the gas. People feel trapped, and they feel taken advantage of," said Carolyn Patterson of Citrus Heights while filling up at a Unocal station in Sacramento.

Higher prices may force Lynda Wofford of Carmichael to return to car pooling to work. Though she hates the idea, she also doesn't like paying $50 a month more for gasoline.

"I go through a tank of gas every few days," she said.

The higher pump prices, coupled with already rising utility bills, has put the squeeze on her household budget.

"I don't go out and buy things that I used to. We learned to sacrifice," said Wofford, a single mother.

Greg Speicher, also filling up at the Unocal, moved from Davis to Sacramento recently, in part to save on commuting costs. He now can walk to work. He's already thinking of more ways to cut travel costs: "I could definitely get a smaller car."

Rising gas prices could force some consumers to abandon their cars entirely.

Bill O'Grady, an energy analyst with A.G. Edwards & Sons, said fuel experts may have underestimated the economic impact of higher oil prices on drivers.

"Last summer, there seemed to be much more consumption impact from the higher prices than previous history would have suggested. It drove lower-income drivers to public transportation," O'Grady said.

Other consumers, among them Patterson, are cutting their fuel bills by driving smaller, more economical cars on long trips and leaving their gas-guzzling sport-utility vehicles and larger vans at home.

"We have two vehicles. My husband and I started using only one as much as possible," Patterson said.

Auto showrooms also are seeing a shift, with SUV sales slowing and some shoppers turning to more fuel-efficient four-cylinder cars and so-called crossover utility vehicles, such as Chrysler's PT Cruiser and Honda's RAV4, according to the National Automobile Dealers Association.

"Gasoline prices are up by over 40 percent over the last two years, and we again see a multi-year increase in customers buying four-cylinder cars," said Paul Taylor, association chief economist.

--------------------------------------------------------------------------------

The Bee's Gilbert Chan can be reached at (916) 321-1045 or gchan@sacbee.com.

http://www.sacbee.com/ib/news/ib_news01_20010411.html

-- Martin Thompson (mthom1927@aol.com), April 11, 2001