Drivers’ pain has suddenly become agony
The average cost of gasoline in California, climbing 37% in four months, reached a record $4.242 a gallon Monday and helped drive the national average to the brink of $4, the Energy Department said.
Pump prices in the state were the country’s most expensive, according to the department’s weekly survey of filling stations, and California endured the biggest increase of the last seven days -- 14.3 cents for a gallon of self-serve regular, after a nearly 15-cent jump the previous week.
Nationally, the average was a record $3.976 a gallon, up 4 cents from a week earlier and 82 cents from this time last year.
“The first thing I do when I get my paycheck is fill up on gas, because I have to take care of that immediately,” said Christina Martinez, who lives in Whittier and works at retailer Fred Segal in West Hollywood. She spends about $80 a week on gasoline. “It’s frustrating that even during election season I’m only thinking of politics in terms of who will get me lower gas prices.”
Some experts attributed the increases in California to refinery problems. In addition, the state’s refiners are making more diesel and aviation fuel -- reducing gasoline production -- to cash in on those more lucrative products. Diesel climbed above $5 a gallon for the first time last week in California.
The exploding costs are forcing serious changes. A record number of Americans are leaving their car keys at home, the American Public Transportation Assn. said Monday. Mass transit use was up nationally by 3.3% in the first quarter of 2008, building on 2007, when mass transit use nationwide reached a 50-year high, the Washington-based group said.
That trend was being mirrored locally. Metro Rail ridership rose nearly 4.5% in April compared with the same month in 2007, said Marc Littman, a spokesman for the Los Angeles County Metropolitan Transportation Authority. Monthly bus boardings, which had been hit hard by a price increase last summer, have climbed ahead of last year’s pace.
“I keep a very steady foot on the accelerator, and I just don’t go out unless I have a purpose. Basically I’m going to stay home more,” said Alfred Diaz, a retired aerospace worker in San Dimas. “I feel that we are getting royally taken for a ride, taken to the cleaners.”
Consumers nationwide are ratcheting back on such things as vacation plans and brand-name purchases, according to a survey released Monday by New York-based NPD Group Inc., which provides consumer and retail buying information for about 1,600 companies. The NPD survey of 2,000 men and women age 18 or older found that 49% were planning to curtail their summer vacation plans, with some expecting to remain home on “staycations.”
A separate survey of more than 43,000 people in April showed that Americans were making lasting changes in their behavior, said David Portalatin, director of industry analysis for NPD Group’s automotive division.
“You’re seeing more Americans trying to work from home, finding jobs that are closer to their homes or moving to new homes that are closer to their jobs,” Portalatin said. “These are fundamental changes.”
The price of fuel is so high that it’s become a political issue and marketing hook.
In Georgia, Gov. Sonny Perdue signed an executive order Monday that suspended a scheduled increase in that state’s gasoline tax that was due to take effect July 1.
Recent promotional gas giveaways drew traffic-snarling crowds in the Dallas and Pittsburgh areas, with some drivers waiting in line for hours.
Carlsbad, Calif.-based Callaway Golf Co. is handing out $100 gas cards with the purchase of certain clubs so that “golfers can now get more distance out of their drives and their gas tanks.”
With attendance flagging by nearly 3,000 fans per game this season from the 27,568 average last year, Major League Baseball’s Minnesota Twins on Monday began a “Tanks From the Twins” program that discounts ticket prices for certain seats by an amount equal to the national average for a gallon of gasoline.
Leading the list of contributing factors to high prices is the cost of oil, followed by taxes, according to the California Energy Commission’s most recent analysis of the component costs of gasoline.
On May 26, when name-brand gasoline in the state was averaging $4.10 a gallon, 77% of that amount was attributed to the price of crude, followed by taxes at 16%, the commission said. Refining costs and profit amounted to 6%; distribution and marketing costs and profit came in at 1%.
That was a shift from three years ago, when oil prices made up 46% of the $2.43 cost of a gallon of gas. Federal, state and local taxes then totaled 54 cents a gallon, compared with 66 cents now (state and local sales taxes are figured as a percentage and therefore rise as the gas price increases), and accounted for 22% of the retail price. Refining costs and profit were 20% while distribution and marketing costs were 12%.
“The price of oil is going to have to go down before gasoline begins to decline, because we’ve already seen that demand for gas has been dropping,” said Marie Montgomery, a spokeswoman for the Automobile Club of Southern California.
Some experts said the peak average price for gasoline in the U.S. might have been reached and could recede before hitting $4 a gallon.
“If the dollar continues to stabilize and we don’t get any big storms in the Gulf [of Mexico], I see no reason for the market going higher,” said Phil Flynn, vice president and energy analyst for Alaron Trading Co. in Chicago.
Others, including federal Energy Information Administration chief Guy Caruso, were more pessimistic and saw gasoline prices continuing to climb if oil prices remained steady.
“If the crude oil prices stay around $120, $125, it looks like it might be in the $4.10-a-gallon area” nationally, Caruso said at a news conference Monday at the Reuters Global Energy Summit in New York.
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Over a barrel
Here’s a cost breakdown of the average retail price of gasoline in California:
Where the cost of gasoline comes from, then and now
$2.43 a gallon on May 23
Crude oil: 46%
Refining costs and profit: 20%
Distribution, marketing costs and profit: 12%
$4.10 a gallon on May 26
Crude oil: 77%
Refining costs, profit: 6%
Distribution, marketing, profit: 1%
Source: California Energy Commission