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Gas prices zoom again

Posted: June 11, 2009 10:09 p.m.
Updated: June 12, 2009 4:30 a.m.

A man prepares to pump gas Thursday at the Chevron station at Newhall Ranch Road and Bouquet Canyon Road in Santa Clarita.

 

Gas prices have zoomed up recently, some past the $3 per gallon mark locally. As a result, local drivers are worried about their budgets.

“I’m seriously worried,” said Eric Klein, an individual courier who spends his work days on the road, found filling up at the Shell gas station on Valencia Boulevard. “It cuts weekend trips for fishing, cuts time for recreation, it cuts profit as a driver. It’s not pretty.”

According to a weekly gas survey of 36 local stations by Randy Cressall, owner of the Valencia Auto Spa Car Wash, the cheapest find is at Mobil and Alliance gas stations, both on Newhall Avenue, at $2.83.9 per gallon of regular fuel if paid with cash.

The most expensive prices at the 36 stations were at the 76 station at Bouquet Canyon Road and Soledad Canyon Road, at $3.05.9 per gallon of regular paid with credit, and $2.97.9 per gallon with cash; and the Chevron and 76 stations on Lyons Avenue, charging $3.01.9 per gallon of regular with credit and $2.97.9 if paid with cash.

The average price between all 36 stations was $2.92.6 per gallon of regular gas paid in cash and $2.97.9 per gallon paid with credit.

“Just as in 2008, commodities investors are pushing up crude oil and wholesale gasoline prices at a frenzied pace that seems to have no connection to domestic fuel consumption or availability,” Automobile Club of Southern California spokesman Jeffrey Spring said.

Auto Club spokeswoman Marie Montgomery offered an explanation of a weaker dollar and unstable market.

“There has been a lot of investor activity going towards commodities,” she said. “The dollar is weaker; as we saw last year, when the dollar is weaker and the stock market is unstable, a lot of investors put their money in commodities such as crude oil and wholesale gasoline. The same thing is happening this year.”

In addition to a weakened dollar, rising expectations from commodities exchange speculators that the global recession has bottomed out, as well as California’s air quality regulations requiring refiners to switch to a slightly more costly summer fuel blend are also contributors. That is according to the information released by the Western States Petroleum Association.

“Right now, with what experts are saying and what’s being reported, commodities exchange is trading with a view that not only our economic condition is improving now, but more importantly, that there’s an expectation that improvement will continue and grow stronger,” said Joe Sparano, president of the Western States Petroleum Association.

“There’s cause for people to buy crude if they believe the economy is going to be better because when the economy improves, demand for energy goes up.”

The Organization of the Petroleum Exporting Countries, or OPEC, has also cut production by about 3 million barrels a day, Sparano said. A lack of refineries in California doesn’t help the situation, as there are only 13 working refineries in California right now, Sparano said.

“With only 13, that tends to have an impact on wholesale prices, which works its way into retail prices,” he said.

Air quality regulations and so-called “green” policies also put a heftier increase on prices, Sparano said. California’s air quality regulations require refiners to switch to the slightly more costly summer fuel blend, according to the association’s information.

“California goes from winter grade to summer grade on April 1,” he said. “Both of those grades cost more to make, but summer costs even more than winter.”  

Although California’s gas prices were reported the highest in the country this week, Sparano said the price of a gallon of gasoline in California – at an average of $2.94.9 per gallon of unleaded regular — was still $1.55 a gallon less than it was at the peak of last year’s prices.

Montgomery said it would be unlikely for prices to skyrocket to last summer’s prices.

“I’m not saying it can’t happen, but they’d have to start going up 20 cents a day,” she said.

Local resident Felicia Nnuro is a traveling nurse who said last summer’s prices cost her $500 to $600 a month in gas.

“I’m hoping, I’m praying, God please don’t let these (prices) come back again,” she said.

But even with the recent spike to almost $3 a gallon for regular fuel, she is worried about keeping up with other expenses.

“I have three teens at home now. If I’m buying gas at this price, how am I going to pay my bills?” she said as she pumped $42.20 worth of gas into her tank at a local Chevron.

 

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