Gas prices may reach $4 this summer
- Published Saturday, April 28, 2007, by the San Jose Mercury News
Get your wallet ready for $4 gas
By Gary Richards
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
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
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
"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,
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
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
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.