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Gas prices may reach $4 this summer

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  • 4/28 SJ Mercury
    Published Saturday, April 28, 2007, by the San Jose Mercury News Get your wallet ready for $4 gas By Gary Richards Mercury News Gas prices soared to a record
    Message 1 of 1 , Apr 30, 2007
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      Published Saturday, April 28, 2007, by the San Jose Mercury News

      Get your wallet ready for $4 gas

      By Gary Richards
      Mercury News

      Gas prices soared to a record $3.38 a gallon in the South Bay on
      Friday, and may be marching this summer to the once unthinkable
      $4 level.

      Records were also set in 10 other cities across California, with the
      latest surge coming on the heels of booming first-quarter profits
      announced this week by four major oil companies totaling more than
      $22 billion.

      Those hefty profits have many drivers grumbling over being gouged,
      but energy experts say widespread refinery problems plus continued
      worries about the Middle East are taking a heavy toll just as the
      weather warms up and American motorists head to the road in likely
      record numbers.

      "We're probably going to see $3.50, maybe $3.75 a gallon in
      California," said Chris Mennis, a petroleum broker in Aptos, saying
      there have been "six refinery glitches in one week across the country
      and now there's a threatened strike in Belgium that could shut down
      600,000 barrels and the threat of a strike in Latin America.

      "All this is happening while our gasoline stocks are at very low
      levels. It looks like gasoline will go through the roof."

      The surge at the pump is the talk of the Bay, from drivers trying to
      ease the pain on their pocketbook to transportation agencies adding
      millions to their budgets to cover fuel costs.

      At a Chevron station off Capitol Expressway and Story Road in San
      Jose on Friday, the cost of a gallon went from $3.59 to $3.63. Isabel
      Candelas pumped less than seven gallons into in her compact car,
      costing $25.

      Candelas, who sells Mary Kay cosmetics, spends about $120 a week on
      fuel. As prices have soared she has been careful to schedule her
      sales calls geographically so that she can drive as little as

      At a Valley Transportation Authority budget meeting Friday, officials
      are planning to buy gas for $3.43 a gallon over the next year -- a
      discounted figure 20 to 30 cents lower than what drivers can expect
      to pay at the pump. That would cost the agency an extra $4 million a

      VTA General Manager Michael Burns reported gas selling for $4 a
      gallon near his home in San Francisco, the city with the most
      expensive gas in the country at $3.50 a gallon on average.

      "I feel like I'm in Europe now with four-buck-a-gallon gas prices,"
      said San Jose Mayor Chuck Reed, a VTA board member. "And I didn't
      even have to pay air fare to get there."

      The city of San Jose set aside $500,000 for higher fuel costs this
      year and has earmarked an additional $750,000 next year if needed,
      margins "that may disappear, given the rising costs of late," said
      Peter Jensen, the city's general services director.

      Prices have risen steadily over the past two months, but eased
      earlier this week. Then came a report Wednesday from the Energy
      Department showing a large, unexpected drop in U.S. gas supplies of
      2.8 million barrels when a gain of 200,000 barrels had been expected.

      Inventories are at their lowest since October 2005, the month after
      Hurricane Katrina ravaged New Orleans and oil facilities in the Gulf
      of Mexico.

      The arrests this week of 172 Islamist militants, some of whom planned
      to attack oil fields in Saudia Arabia, sent oil prices to over $66 a
      barrel Friday.

      Toss in problems this week at a BP refinery in Indiana and a
      ConocoPhillips refinery in Wilmington, Calif., that trimmed
      production by 200,000 barrels a day.

      "We all saw the impact that hurricanes had on fuel prices in 2005,"
      said Sean Comey of the AAA. "As bad as that was, it was actually a
      relatively minor event compared to some of the possible worst-case

      On the flip side, there's Big Oil.

      Chevron announced earnings of $4.7 billion during the first three
      months of the year. This followed similar profit reports from BP,
      ConocoPhillips and Exxon Mobil.

      Eddie Sabalsa filled up at the Chevron station on Capitol Expressway
      on Friday and estimates that he spends $400 to $500 a month on gas
      for his SUV and an additional $800 to $1,000 a month for diesel fuel
      for his tow truck.

      Then there's Eileen Hamper of Campbell, a retiree who drives 60 mph
      in the slow lane to boost her mileage.

      "I even put a reflective sticker on my back window: `I'M SLOW,' so
      that the cars behind me will move on quickly," she said. "The sticker
      has worked amazingly well. I don't get the bumper-riders for more
      than about 20 seconds now."

      Prices are now 21 cents higher than last May in San Jose, when the
      previous record of $3.36 was reached. Is $4 a gallon in our future?

      "That," said Susanne Garfield of the California Energy Commission,
      "is the $64 bizillion question."

      Contact Gary Richards at mrroadshow@... or (408) 920-5335.
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