Steep Gas Prices Exerting Wide Strain On Local Companies

Little Relief in Sight Until Fall, Analyst Says

By CONNIE LEWIS
San Diego Business Journal [1] Staff

For the past few years gasoline prices have spiked in the spring and gone down at the beginning of the summer driving season. But as oil prices continue to break record highs, analysts predict that relief at the pump is further off.

At least one, Charles Langley with Utility Consumers' Action Network, a local advocacy group, doesn't expect gas prices to drop until the November presidential election nears.

"First of all, we hope that gas does not breach the $4 level in San Diego, but we think it will shatter that barrier in the next couple weeks," Langley said.

On April 23, regular unleaded gas, according to the AAA Daily Fuel Gauge Report, averaged $3.91 a gallon, up from $3.89 the day before, $3.65 a month ago and $3.39 on the same day last year.

Langley also thinks that if prices go back down, politics, not market conditions, will be the reason.

"There will be a concerted effort on the part of the oil industry to stabilize prices going into a major election," he said, citing the 2006 midterm election when gas prices dropped 90 cents a gallon as a case in point.

"The oil industry understands that no matter how much money they give to politicians, when prices are high consumers get upset," he said. "They understand that if they want to maintain an oil-friendly government they must lower prices before an election."

According to University of San Diego economist Alan Gin, "Every 10-cent increase in a gallon of gas takes $7 million a month out of the local economy." But the caveat would be if motorists changed their behavior by buying more fuel-efficient cars or reduced their driving, he added.

"Inflation is also a result of higher gas prices, and because we don't produce much (gasoline), a lot of what we consume is trucked in. That eventually translates into higher prices at the retail level," he said.

Weighing Rate Adjustments

Rebecca Blackwood, co-owner of Crest Offset Printing Co. in National City, said that in the past the company has adjusted its rates upward in accordance with higher paper costs, but has held off additional increases in the face of higher fuel costs.

That was before receiving a recent statement billing her for nearly twice the amount from the prior month for gas charges to fuel a van and two cars used for pickups and deliveries.

"Granted, we're busier so that's part of it, but a big chunk was the increase in gas prices," she said.