Sorry. I got to if from googlenews and it didn't require a login
Effects of Gulf region gas woes surprise some local motorists
By Gary Richards
Mercury News Staff Columnist
Q For years we have been told that gasoline costs more in California because we use a special formulation made almost exclusively in-state. So, if we have a special blend not used elsewhere, why should we be affected by the shortage of gas refined out of the Gulf of Mexico?
John Michael O'Connor
A Because the oil market is a global market. When supplies of crude oil delivered worldwide dwindle, the cost can soar everywhere -- to more than $70 a barrel last week. California depends heavily on outside sources, last year importing nearly 60 percent of its oil from Alaska and foreign countries. Until the recent run-up in prices, the price of crude oil had increased 75 cents per gallon, while prices at the pump had risen 79 cents since Jan. 1. Our special blend is a big factor in the price we pay, but not the only factor.
Q For the first time in a long time, I hear California's average gas prices may be lower than most other states on the East Coast. Is this true?
P.R.
Santa Cruz
A It's the Midwest states reeling the most. As of Friday, self-serve unleaded was selling for $2.95 a gallon in California, lower than in Michigan ($3.13), Indiana ($3.06), Illinois ($3.01), Wisconsin ($2.99) and Nebraska ($2.97). The national average, according to the AAA, reached $2.87 on Friday, 17 cents higher than the day before. California's average of $2.95 is 13 cents under the state's inflation-adjusted high of $3.08 in 1981.
Q According to the media, California does not import, distribute or refine oil from the Gulf Coast area. Yet, our prices began to zoom and continue to do so since Hurricane Katrina. What excuse are refineries giving this time? Price gouging is my answer.
Marcia Fariss
A Prices began to rise here before Katrina's fury was felt because of refinery problems in Rodeo and Martinez. In addition, some ships carrying crude oil to California were diverted to the Gulf of Mexico so gas supplies there can be replenished.
Q I noticed that gas at brand-name stations, mostly 76, is cheaper than the discounters, like Rotten Robbie, Beacon, at least in Santa Cruz. . . . Why was the Chevron station on Saratoga Avenue selling gas for six cents less than the Rotten Robbie a block away? . . . Gas at my Shell station on Capitol Expressway is cheaper than the Gas & Shop you wrote about recently. I don't think I've ever seen that. Why is this?
Steve C. and many more
A Most discount stations buy their gas from the major refiners like Shell and Chevron. When supplies get tight or there are fears they will get tight, refiners often cut sales to the independents, and that drives up prices at places like Rotten Robbie and mom and pop stores. Chris-the-Gas-Trader says the current $3-plus a gallon price is about a dime lower -- yes, lower -- than what they should be charging: ``Those stations are not making a profit right now. They are going bust.'' Some experts say prices may rise another 30 cents.
Q I'm disappointed that prices are rising, but I cannot fathom this sense of entitlement shared by many when it comes to cheap gas and the outrage at high prices. The problem isn't a hurricane, increasing Third World demand or greedy oil companies. It's the public's unrealistic expectation that gas will be inexpensive and unlimited for the rest of time. There's increasing demand and limited supply and a fragile delivery system. Only the willfully naive would not have seen that a day of reckoning was bound to arrive someday. If you are mad, get mad at the person who sold you on the notion that cheap gas would be plentiful forever. Then get mad at yourself for being gullible enough to believe it.
David Wood
Menlo Park
A You speak with wisdom. . . .
Q To ease the demand for gas during the current crises, why don't people work from home one day a week for three months? That should reduce demand by 20 percent for those who commute five days a week. Can you publicize this and see if it gets any traction?
Jim Oravec
A Anyone heeding Jim's advice or have other suggestions on how to cut back on driving?
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Contact Gary Richards at mrroadshow@mercurynews .com or (408) 920-5335. Please leave a daytime phone number.
