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$2 a gallon: Gas prices break records


Gas prices hit an average of $2 a gallon for self-serve unleaded in San Jose on Monday, a record that is almost certain to be broken before Memorial Day.

``This doesn't bode well,'' said Bronwyn Hogan, who tracks energy prices for the California State Automobile Association. ``It may not be a happy summer.''

Prices have risen throughout California, with the Bay Area being the hardest hit. Gas is going for more than $2.10 a gallon at many stations along the Peninsula and in San Francisco, and it's next to impossible to find gas for under $1.90 a gallon even at discount stores.

The San Jose-area record, which is not adjusted for inflation, surpasses the previous San Jose high of $1.97 a gallon set last October. Motorists who pay for mid-grade or premium gas are shelling out as much as $2.29 a gallon.

Monday's auto club figures are a spot check of selected cities across the state and nation. San Francisco's $2.06 average is a penny below that city's record set in September, while the Santa Cruz average stood at $1.93, a nickel below records in that coastal town.

Updated prices for Peninsula and East Bay cities won't be available until mid-May. However many of those areas have seen prices reach well above $2 a gallon, almost certainly breaking records.

The question many are asking: Could prices soar to $3 a gallon, breaking even the inflation-adjusted mark of around $2.50 a gallon set during the Arab oil embargo of the early 1980s?

``My God, that's a definite possibility if there is some type of supply interruption,'' said Dennis DeCota, executive director of the California Station and Automotive Repair Association.

Prices have jumped 26 cents a gallon in Silicon Valley since February and nearly a dime in the past week, after a fire April 24 at a Tosco refinery in Carson. Although gas supplies were not affected, the fear of a shortage caused buyers for independent stations to bid up the price of gas on the spot market.

Tosco added to California's immediate woes when it began using ethanol in production, removing the fuel additive MTBE. That means it is unable to exchange gas with other oil companies that still are using MTBE in their process of reformulated gas.

Refineries are the winner, taking in as much as 75 cents on every gallon of gas to cover production costs and profits. That's 17 cents more a gallon than in March, according to the California Energy Commission. Exxon Mobil Corp. and Chevron Corp., the top two U.S. oil companies, said last week that first-quarter earnings rose by more than 50 percent, partly because of refining profits.

Dealers, however, are not reaping a big benefit, according to the energy commission. Some are making a penny or two per gallon, down from the dime they usually receive. The state agency reports that some independents are losing up to three cents on every gallon of gas.

``The independent guys are just eating it,' said DeCota. ``They're getting slammed, and it's getting ugly.''

Motorists are getting slammed, too, paying $3 to $5 more for a fill for a medium-size car than they were on Valentine's Day. Yet both the auto club and gas station association say outrage has been muted. ``I think they are numbed by it,'' said DeCota.

Gas was selling for $2.05 a gallon at the Shell station on The Alameda on Monday, but Javier Ramos was one of six drivers lining up for a tank of gas. ``Nothing you can do about these prices,'' said the San Jose man. ``I've paid two bucks before, and I'll be paying it again.''

Records are also falling in Southern California, where Santa Barbara, San Diego and Los Angeles reported all-time highs ranging from $1.81 to $1.96 for a gallon of self-serve unleaded fuel. Prices are approaching $1.90 a gallon in Chicago and other major cities across the country, and the national average of $1.63 for regular gas is a 19-cent jump from a month ago.

Many experts fear that repeated rolling blackouts this spring or summer could shut down gas production, leading to more spikes at the pump. But one glimmer of hope came Monday when industry watchers reported that some refineries were ready to boost production to take advantage of soaring prices. Inventories now are low -- down nearly 5 percent in California for the state's blend of reformulated fuel and 2.4 percent lower nationwide than a year ago.

The price of crude oil, however, remains around $28 a barrel, well below figures during last year's price spike or the $40 mark set during the Gulf War a decade ago.

-- Martin Thompson (, May 01, 2001


Even at $2.00/gallon, gas is still TOO CHEAP! This is a non- renewable resourse that we use like water. Since when does it take a 4 wheel drive SUV to go from the suburb to downtown?

-- Rob McCarthy (, May 01, 2001.

Premium gas in Madison,WI is at $2.03 a gal. all along University Ave.

-- prepgirl (, May 01, 2001.

$2.05 in DC.

-- L. Hunter Cassells (, May 02, 2001.

Page 2B

Supply fears drive gasoline prices higher Refinery fire contributes to shortage worries in Midwest By Dina Temple-Raston USA TODAY

A refinery fire in the Midwest, razor-thin supplies and worries about shortages just as the summer driving season begins are conspiring to raise gasoline prices to record levels.

Gasoline futures for May delivery rose to $1.163 a gallon on the New York Mercantile Exchange on Monday, breaking a 17-year record. Futures contracts represent wholesale prices, and the cost of gasoline for May delivery rose 23% over the past month on shortage concerns.

''This isn't just an end-of-the-month spike in prices,'' says Derek Van Eck, president of Van Eck Associates. ''Inventories are exceptionally low, and there have been a lot of unexpected refinery outages. We're dealing with big supply and demand problems.''

Futures prices usually take several weeks to show up at the pump. Generally, retail prices are 50 cents to 70 cents more a gallon than wholesale prices. Pump prices are already up 20 cents over this time last year, averaging $1.63 a gallon nationwide, according to AAA.

In parts of Illinois, prices are topping $2 a gallon and could go higher in the wake of a local refinery fire. Tosco lost half its refining capacity at a southern Illinois facility after a fire over the weekend. The refinery supplies the St. Louis and Chicago areas.

Tosco said Monday that the facility, which produces 295,000 barrels a day of gasoline and diesel fuel, could be down for weeks.

That's bad news for a part of the country that is already struggling with inventories that are about 1% below last year's crisis levels. The Tosco fire couldn't have come at a worse time. Another refinery, Premcor's Blue Island, Ill., facility, closed over the winter. While it was a small operation, producing about 85,000 barrels a day, its loss on top of Tosco's makes the situation in the Midwest more dire, analysts say.

''We're at the point in the Midwest where we can't afford to lose any refining capacity,'' says Bill O'Grady, oil analyst at A.G. Edwards in St. Louis, where the average price for unleaded is topping $1.67 a gallon. ''I'd say we are just a couple weeks away from a crisis.''

How much higher can prices go? Analysts will be watching today's inventory report from the American Petroleum Institute to see if refineries have been able to build inventories. If they have, that could quell fears of summer shortages.

''The API number is going to be a very big deal,'' Van Eck says.

-- Martin Thompson (, May 02, 2001.

Amazing! One day goes by and gas is up. Premium $2.06 Madison WI

-- PrepGirl (, May 02, 2001.

May 1: gasoline in Central South Michigan is 1.90/2.00/2.10 for the three grades. Small towns and medium size towns, 30 minutes from a major fuel pipline terminal from Chicago to Michigan.

Let's hope the govt leaves the free market to set the cost, or we'll have shortages!

-- Programmer Farmer (, May 03, 2001.

May 3, Twin cities. Gas just went to 1.89. It was 1.61 Monday. that's a 28 cent jump in four days. there have been no processing problems around here.

-- John Littmann (LITTMANNJOHNTL@AOL.COM), May 03, 2001.

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