Gas prices set record: $2.03 a gallon, on average

www.nctimes.net DAN McSWAIN Staff Writer

Little surprise here ---- gasoline prices hit a record high in North County on Monday, as a gallon of regular cost an average $2.03, up 10 cents from a week earlier and 64 cents higher than one year ago, a North County Times survey found.

State officials estimate that the increase costs a typical two-car family an extra $64 a month. The previous record, $1.97 a gallon, was reached on May 21, 2001.

Because California consumers burn about 1.25 billion gallons a month, officials estimate, the oil industry is reaping additional revenue from the state at a rate of $800 million a month.

North County drivers were struggling to hang onto some of that cash Monday, making for a crowded lot at Valley Fuels on East Valley Parkway, where regular cost $1.92 a gallon, among the cheapest in Escondido.

"I think it's greed; I don't think there's a shortage of anything," said Jack Bryson, an Escondido resident, as he filled his eight-cylinder Dodge Ram 1500 pickup.

Also in line for gas was Matt Bere of Solana Beach. He was dwarfed by his Ford Expedition, which he estimates gets 16 miles to a gallon but has plenty of room for his surf board.

"I love the car," Bere said. But the price of gas? "It seems absolutely outrageous."

Across the street, a Chevron station charged $2.10 for regular.

Oil industry analysts say that about half of this year's surge in prices at the pump has been caused by a sharp rise in worldwide costs for crude oil, which in turn have been driven higher by war clouds in the Persian Gulf and curtailed exports from Venezuela.

But energy economists say the other half has gone directly to California's seven giant refining companies ---- BP West Coast Products LLC (the Arco brand's parent), ChevronTexaco Corp., ExxonMobil Corp., Shell Oil Products U.S., ConocoPhillips (76 and Circle K) Valero Energy Corp. (Ultramar) and Tesoro Petroleum Corp. ---- which control supplies and have apparently taken advantage of the turmoil to boost profits.

"Refiner margins have gone up," said Severin Borenstein, a Berkeley economist who heads the University of California's Energy Institute.

Station owners, who have faced skyrocketing wholesale prices for gasoline, have been less fortunate, Borenstein said. "It's very unlikely that dealer margins have gone up."

Another indication of larger profits for refiners in California is the widening premium over retail prices in other states, where refiners pay an equivalent or greater cost for their crude oil supplies.

A survey taken Monday by the U.S. Department of Energy found that the national average for a gallon of regular was $1.69, a staggering 34 cents cheaper than in North County.

Borenstein calculates that California's low-emissions fuel recipe ought to cost about 10 to 12 cents more than gasoline in other states, but that the additional 22 cents probably represents premium pricing by in-state refining companies.

Consumer advocates and some members of Congress have called for investigations into whether oil companies are "price gouging," or reaping unfair profits.

Oil company executives have become increasingly loath to talk to reporters as prices have shot higher over the last 10 weeks. Instead, most have referred calls to industry lobbyists.

One of them, Anita Mangels, of the Western States Petroleum Association, said last week that California's refining companies are simply passing along their higher costs to buy crude oil.

"I think the general consensus out there is that this is a market issue," Mangels said. "It is strictly market conditions that determine retail prices."

Mangels predicted that official probes into high prices at the pump will go nowhere. "Usually, when these things occur (price spikes), there are the inevitable investigations and the inevitable findings that no wrongdoing did occur," she said.

A series of price shocks in 1998 and 1999 sparked a widely publicized investigation by California Attorney General Bill Lockyer, which found no illegal activity but suggested a series of measures to head off future rounds of sudden increases. None has been adopted by the Legislature.

This time, Lockyer has been relatively silent on the issue. Calls to his office Monday were not returned.

Contact staff writer Dan McSwain at (760) 740-3514 or dmcswain@nctimes.com.

3/4/03