County Price Already at $3.90

By Jenni Mintz, Ventura County Star, Calif.

Apr. 11–Motorists are bracing themselves as the price of regular unleaded gasoline soars toward $4 a gallon at stations across California.

While the highest prices in Ventura County were hovering around $3.90 a gallon Thursday, a Shell station in San Luis Obispo was selling it for $3.99.

“Everybody’s talking about the $4 mark now,” said Joe Kassar, owner of Main & Mills Mobil in Ventura. “The way things are going, I don’t think it’s going to be long before we see $4.”

The latest estimate of when many stations will hit that mark is the week after next, according to Douglas MacIntyre, senior oil market analyst for the U.S. Energy Information Administration.

The price spike is not a good sign heading into the peak summer driving season. Gasoline prices are rising, in part, because of a supply crunch that occurs every spring when refiners switch over from making winter grade gasoline to the less polluting fuel they’re required to sell during hotter months. Summer grade gasoline is more expensive to make. Also, refiners try to sell all of their winter grade fuel before the switch, which drops supplies to very low levels.

This year, the switch is being exacerbated by two unusual factors: tight supplies of key gasoline blending components and record oil prices. Analysts say alkylate, an ingredient critical to the manufacture of summer grade gasoline, is in short supply and will push prices higher.

Sales are down On Thursday, Kassar was charging $3.90 for regular, $3.99 for mid-grade and $4.09 for premium.

He admitted that nobody wants to be the first to charge $4 a gallon.

“We feel almost ashamed of it going up above the $4 mark; we feel like it’s our fault,” he said. However, he said, major oil companies, not retailers like him, are raising rates.

“We buy this product, we sell it, and we make this very slim margin, which is decreasing day by day,” he said.

Kassar’s sales are down 10 percent compared with a year ago because customers are driving less and switching to lower grade fuel. When prices soar, competition gets fiercer because people shop for the best price, he said.

In Ventura County, the average price was a record $3.75 a gallon Thursday, up 49 cents from a year ago, according to the Automobile Club of Southern California.

The year-over-year price difference has boosted the cost of filling up a Toyota Camry, the most popular new car sold last year in Ventura County, from $60 to $69.

Pump prices have been devastating to Louie Fuentes, a Simi Valley resident who attends Santa Barbara City College and works in Ventura.

“Right now, it’s killing me,” Fuentes said. “I remember when I was paying $2, and everyone was having a fit.”

Although many drivers talk about driving less, Alan Duren said there’s nothing he can do because he travels out of town frequently.

“You live with it,” the Port Hueneme resident said. “You don’t have a choice.”

Many drivers agree but are trying to find ways to stretch their gasoline.

Mark Millis of Burbank has slowed down to 60 mph on the freeway because it improves his gasoline mileage about 30 percent.

“I get a lot of bad looks,” he said.

Millis complained that gasoline prices are outrageous, but he doesn’t expect them to get any better. He expects to pay $4 a gallon by the end of the month.

Tom Kloza, an analyst at Oil Price Information Service in New Jersey, doesn’t think anyone will have to get used to paying that amount.

“I would say we’re a lot closer to a peak than to something that represents the new normal,” he said.

MacIntyre, the oil analyst, forecasts that the national monthly average for regular unleaded will peak in May at $3.62, with the West Coast’s monthly average topping at $3.90. Weekly averages are expected to be higher.

California and Ventura County generally run higher than the West Coast average.

The state’s average Thursday was $3.75, the highest in the country, according to AAA. California gasoline is more expensive because the state uses a special blend and the state is separated by time and distance from refiners outside the state, said Susanne Garfield, a spokeswoman for the California Energy Commission.

Hawaii, which typically has the highest gasoline average in the country, followed California at $3.67 on Thursday, according to AAA. However, in the remote coastal town of Hana, the price was around $4.55 a gallon.

Meanwhile, the national average was $3.36.

“If people want to look for any good news, they should be looking at crude oil prices,” MacIntyre said. “If they go below $100 and stay below, that would imply prices less than what we’re talking about here.”

MacIntyre said it’s very difficult to judge day-to-day fluctuations, but he expected April crude oil futures to average $104. He now forecasts that average to be higher, after crude oil futures reached a record $112 a barrel Wednesday following the U.S. Energy Department saying supplies fell unexpectedly last week. MacIntyre projects that prices will average above $100 through October.

“We don’t see any substantial price decline imminent,” he said Thursday.

Crude oil, the main ingredient in gasoline, fell Thursday, but remained close to record levels.

Light, sweet crude for May delivery settled at $110.11 a barrel on the New York Mercantile Exchange.

As high as gasoline prices are, they could be worse, MacIntyre said.

“At least we have an ample amount of gasoline inventories,” he said. “That is what is keeping prices from approaching the diesel fuel price.”

As MacIntyre sat in his office in Washington, D.C., the sounds of truckers honking their horns in protest of high prices blasted through the air. On the East Coast, diesel prices hover around $4 a gallon. It’s worse in Ventura County, where diesel averaged $4.29 on Thursday.

At a gas station in Camarillo, Michael Carney was paying $4.39 a gallon for diesel. “It really does affect me,” he said while filling up his Dodge Ram truck Thursday. The Washington resident said he’s even considering parking his truck and buying a hybrid.

Even though demand for gasoline has declined in the United States, global demand is increasing and supply is still struggling to keep up, MacIntyre said.

No one predicted this rapid of a rise in oil, and it’s difficult to forecast how high prices will go, said Garfield, the California Energy Commission spokeswoman. “I don’t think we’re going to see low prices again,” she said.

The Associated Press contributed to this report.

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