When Will Gas Prices Reach $4 a Gallon?

A recent spurt in gasoline prices has experts saying $4 a gallon may not be far off — bad news for anyone who drives.

Some Valley residents vow to drive less, and some businesses say they simply will have to raise rates.

Erika Tate of Fresno, who just bought a new car, said she could only afford to put $20 worth in her tank Tuesday.

Her Nissan Altima took in about 6 gallons at the Valero station at Blackstone and Sierra avenues — where regular unleaded was selling for $3.39 a gallon — before Tate stopped the pump.

The 22-year-old, who works for a collection agency, said she already is struggling and has cut back on going out and having fun so she has enough gas money to get to work and run necessary errands.

"Maybe I’ll get a bike," she said.

Gas prices reached record highs Tuesday in Fresno and other parts of California, and some analysts say they could reach $4 a gallon this spring or summer.

In Fresno, the average price for a gallon of regular unleaded fuel topped off at $3.51, up from $3.16 a month ago, while the average price in the state reached $3.50, an increase of 38 cents in three weeks, according to AAA of Northern California, which tracks fuel prices.

Whether prices reach $4 a gallon in the annual spring price surge this year remains to be seen. Prices typically climb because refineries are preparing to switch to their more costly summer blend and the summer driving season is just ahead, analysts said.

The falling value of the U.S. currency also is contributing: "As the dollar falls, more overseas investors find crude oil to be a safe investment," said Michael Geeser, AAA spokesman.

"It’s possible we’ll see $4," he said. "It’s already 50 to 60 cents more than it was a year ago in California. If you play that out … it could be considerably higher toward the end of summer."

But Severin Borenstein, director of the University of California Energy Institute in Berkeley, said he isn’t so sure. Although demand for gasoline is growing worldwide, less consumption in the United States could blunt the typical spring price hike.

Borenstein said that every $1 increase in the price of a barrel of crude oil leads to a hike of 2.5 cents at the pump. "If we avoid that spike, we may not see $4," he said Tuesday. "If we see what we did last year, $4 could be possible."

Chelsea Mollica, manager of DaVinci’s Pizza at Willow and Ashlan avenues, knows her delivery drivers are keeping a close eye on the cost of gasoline. That’s because they get a bonus — now set at 90 cents per delivery — as long as average local gasoline prices stay below $3.50. The company tacks on a $2 delivery charge to each bill.

"If it goes up to $3.50 to $4 [per gallon], they’d get a dollar" per delivery, she said.

And if it goes above $4? "We don’t have that on the chart," she said.

Limousine-company owner Deena Papagni, of Touch of Class Limousine Service in Fresno, began charging a fuel surcharge of $4 an hour when gas hit $3.19 a gallon. She said she held off as long as she could, until rising fuel costs began eating away profits.

The fuel bill for her 18-vehicle fleet averages about $16,000 a month, more than double what it was a few years ago. "We have one vehicle that costs $180 to fill," she said.

She said she will consider raising rates again if gas hits $4 a gallon. "If we can’t pay our bills, we can’t operate," she said.

Todd Valeri, general manager of American Ambulance in Fresno, said the company would have taken a worse financial hit in gasoline spending if it hadn’t just replaced much of its fleet this year.

The ambulance company swapped 64 of its 85 vehicles this year with more fuel-efficient models. The new ambulances get 16 miles per gallon compared with 9 miles per gallon. If prices jump to $4, Valeri said American Ambulance is in a much better position to handle the increase without passing it on to customers: "It hasn’t come down to that yet."

The ambulance company needs about 4,000 to 4,500 gallons of fuel a week for the 70,000 miles its vehicles drive in Fresno and Kings counties.

Many are cutting back. Nationwide, gasoline consumption is down an average of 1.1% from a year ago, and gasoline inventories for the week ending Feb. 23 (the most current period) totaled 220.2 million barrels, or 2% above the 5-year average, the federal Energy Information Administration reported.

Likewise, California supplies are "quite good" and production is strong, said Susanne Garfield, a state Energy Commission spokeswoman.

Gary Maguire, co-owner of the Chevron station at Ventura and Cedar avenues in Fresno, said that because of that abundance of supply he doubts gasoline will reach $4 a gallon.

"Absolutely not," Maguire said. "In order for us to get to $4 we would have a major refinery problem. But with demand going down, I just don’t see it. I think we are topping out right now."

Maguire was selling regular unleaded for $3.49.

At a Chevron station at Olive and Highway 99, Amy Garcia cringed at paying $30 to fuel her Ford F-150 truck.

"And that is only filling it about halfway," Garcia said. "It costs about $70 to $75 to fill it, but I just can’t pay that right now."

Garcia said she didn’t want to think about gas approaching the $4 mark. As it is, the stay-at-home mother limits her driving to necessary trips such as the grocery store or doctor visits.

"It really makes you think about how you drive," she said.

Harry Dhaliwal, owner of the Olive Avenue Chevron, said he sympathizes with his customers, who are increasingly making smaller purchases of gas.

"It used to be people would spend $20, or $30, and now it’s more like $10 and $20," Dhaliwal said. "The only people who fill up anymore are the people with the credit cards. What does that tell you?"

Becky Pendergrass had one thought about $4-a-gallon gas: "Outrageous."

She said she commutes from Selma to Fresno for her job in a radiologist’s office and would love to drive less but can’t.

"I really hope that we don’t get there," she said. "But something tells me we will."

Jason Bush, however, had a differing viewpoint. The assistant professor of biology at California State University, Fresno is a Canadian citizen who moved to Fresno five years ago.

Bush, who was filling up a rental car at Bad Bud’s at Herndon and Cedar avenues, said prices in the United States are low compared with those in Canada and Europe. That’s why Canadians opt for smaller cars.

"Americans need to realize, by world standards, they are getting a pretty good deal," he said.