Gas Prices at Record Highs; $4 a Gallon Ahead, Experts Say

By Dale Kasler, The Sacramento Bee, Calif.

Mar. 3–Gasoline prices set a record in Sacramento and several other California markets Monday, and consultants said motorists should prepare for $4 gas sometime this year.

AAA said the average hit $3.49 a gallon for self-serve regular in Sacramento, up 2 cents from the day before and a resounding 39 cents since a month ago. Sacramentans also paid more than ever for diesel fuel, $3.88 a gallon.

The main culprit was runaway crude oil prices, which hit $103.76 a barrel on the New York Mercantile Exchange. Analysts said higher energy prices will cause further harm to an economy laid low by the slumping housing market.

“It’s not good news for the U.S. economy. By itself it would be a drag but not a recession. With everything else that is going on, it’s going to make the recession worse,” said Severin Borenstein, director of the University of California Energy Institute in Berkeley.

The statewide average for gas was also $3.49 a gallon, a fraction of a cent shy of the last spring’s record, AAA said. Records fell in San Francisco, Yolo County and several other markets.

“It’s appalling,” said Cheryl Domnitch as she filled her Subaru station wagon at a Shell station on Rocklin’s Sierra College Boulevard. The price: $3.50 a gallon.

Domnitch, like many motorists, is having trouble cutting back on her gasoline usage; she commutes to Rocklin four days a week from her home in Grass Valley to attend college. Experts say that isn’t surprising. Until they’re convinced prices are permanently higher, consumers don’t scale back their fuel consumption very much, said Dan Sperling, director of the Institute for Transportation Studies at UC Davis.

“They’ve gotten used to higher prices; they’re dependent on their vehicles,” he said.

David Hackett, an oil industry consultant at Stillwater Associates in Irvine, said gas prices might be going up even more quickly, except that the state’s refineries are performing well. Last spring, numerous production glitches occurred as refiners went through their annual overhauls and conversion to summer fuel blends, causing a huge spike in prices. This year supplies have held up and production at the refineries is going well, he said.

Nonetheless, it’s likely that gas will hit $4 sometime this year. Summer-blend fuel is always more expensive, vacation driving puts more upward pressure on demand, and it appears that crude oil prices will continue to rise, Hackett said.

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