Gas prices surging in county

www.signonsandiego.com By Frank Green UNION-TRIBUNE STAFF WRITER February 15, 2003

Gasoline prices have surged at a record rate of 10 cents a gallon in San Diego County since Monday, sparking assertions by some industry observers that refiners are gouging motorists.

The average cost of a gallon of unleaded regular yesterday was $1.88 – 50 cents higher than at this time last year, according to a survey of 550 area stations by the Utility Consumer's Action Network.

Meanwhile, a survey by the Automobile Club of Southern California released yesterday indicated a slightly lower average in the county of $1.83.

The cost of fuel may be rising so fast that the surveys can't keep pace.

At a 76 station in Hillcrest yesterday, unleaded regular was going for $1.96, while a Chevron station in Mission Valley had the grade priced at $1.94.

Those prices are uncomfortably close to the record county high of $2.02 a gallon in May 2001.

"What can I do? I need gas to get to work," said June Enmark, who was filling up her van at a Mobil station in La Mesa yesterday afternoon.

Oil industry executives said yesterday that the high gas prices reflect steep increases in world crude-oil prices, which have jumped because of jitters about a possible war with Iraq, low oil production from strike-torn Venezuela and continued high fuel demand from U.S. consumers, among other factors.

"I can only say that gas prices are based on supply, demand and competition, and when you look at the marketplace you have to consider those three factors," said Nicole Hogson, a ChevronTexaco spokeswoman in San Francisco.

AAA spokesman Geoff Sundstrom said the price spikes of recent weeks aren't justified and are "uncomfortably close" to gouging.

Sundstrom made his remarks based on a national AAA survey showing the average fuel price across the country at $1.63 – 25 cents a gallon less than the San Diego price cited by UCAN.

Likewise, UCAN spokesman Charles Langley said the activist group is concerned that refiners might be taking advantage of world tensions to extract artificial profits.

"Is this real or is it opportunistic gouging?," asked Langley. "The only way to really know is after-the-fact forensic accounting."

UCAN estimates that for every penny jump in fuel prices, the average household pays an extra $10 or so for gas over a year if the increase is sustained.

"That is a lot of money taken out of the local economy," Langley said.

Oil-industry analysts said the pain at the pump isn't likely to end soon.

Fuel prices could rise by an additional 25 percent to over $40 a barrel before rich nations open the taps at their massive emergency stockpiles to cool the rally, the analysts said.

Prices already have jumped 45 percent in three months to the mid-$30s per barrel.

The West has so far balked at releasing stockpiled oil, confident that Saudi Arabia and others in the Organization of the Petroleum Exporting Countries are stepping in to cover shortfalls.

But analysts said a stockpile release may be needed to cap prices in the $40s in the event of war with Iraq, the world's eighth-largest oil exporter.

If the United States and Britain decide a military operation is necessary, the key question is whether there will be a simultaneous announcement that the U.S. Strategic Petroleum Reserve will be used, said Adam Sieminski of Deutsche Bank.

"I think it will, and this should prevent prices going much over $40," Sieminski said.

Reuters contributed to this report. Frank Green: (619) 293-1233; frank.green@uniontrib.com