Gas prices soar to $3.31 on average

By: BRADLEY J. FIKES - Staff Writer 
Read this story as it originally appeared in the North County Times.

NORTH COUNTY -- A 6-cent jump in the average price of regular unleaded gas Wednesday sent it to $3.31 per gallon, the highest it's been in North County in nearly a year. On April 11, the North County average was $3.251 per gallon.

The average last reached that level on June 2, 2006, as reported in the continuing survey by the Utility Consumers' Action Network for the North County Times that was updated Wednesday. On April 18 of last year, the price was $2.99 per gallon.

But while gas is 32 cents more expensive than a year ago, the cost of crude oil has declined substantially. This goes against the belief that crude oil price swings are the driver for gas price increases, said Charles Langley, a consumer advocate with the utility consumers' group who conducted the survey of area gas stations.

The average price in the group's survey peaked last year on May 14, at $3.414 per gallon. So while prices are increasing, it makes sense to fill up sooner rather than later.

The lowest North County price, $3.17.9 per gallon, was found at five stations, four in Escondido and one in San Marcos, all cash prices. The San Marcos station is an Arco at San Marcos Boulevard at Las Posas. The others are the Golden State at Washington near Escondido Boulevard, and three Arcos; at Nordahl at SR 78, at Iris and El Norte Parkway, and at North Escondido Boulevard and Washington.

Gas prices typically rise in spring and early summer, as the peak driving season gets under way. They decline in the autumn.

Energy companies attribute this spring-ahead, fall-back cycle to seasonal supply and demand changes. In California, they also blame environmental restrictions on how gasoline is formulated. However, UCAN and other consumer groups say the companies are tacitly manipulating supply to keep it just a bit shy of demand, reaping extra profits as prices soar.

Light sweet crude, the type of oil commonly used to make gas, closed at $72.17 a barrel on April 19, 2006, for May delivery on the Nymex exchange. On Thursday, it closed at $61.83 per barrel.

Using a rule of thumb that every $10 swing in the price of crude oil equals 25 cents in the price of gas, Langley said North County's average gas price should have dropped to $2.82 per gallon.

"If you really believe there's a correlation between the cost of oil and the price of gas, that's what we should be paying," Langley said.

An increase in demand for gas or a decrease in supply could explain the higher price this year, but Langley said neither explanation made sense. Higher gasoline prices have made people more fuel-conscious, so they are cutting back on gas consumption, Langley said.

The California Board of Equalization said on April 13, its most recent report, that gasoline consumption for the last three quarters of 2006 was 112 million gallons less than the comparable period in 2005. This was the first decline in the state's gas consumption in 14 years. The average statewide gas price during the nine months was $2.958. The board said Californians may be avoiding long trips or switching to fuel-efficient vehicles such as hybrid cars.

However, the board has no information for gas consumption this year.

On the supply side, production and stocks of reformulated gasoline, the kind used in nearly all motor vehicles, are up significantly this year over last, according to the California Energy Commission.

California refineries produced 8.3 percent more reformulated gasoline in the week ended April 13 than in the same week a year ago. Stocks of reformulated gasoline are 6.2 percent higher than a year ago.

But nationwide, gasoline inventories are about 7 million barrels below normal going into the summer driving season, Guy Caruso, administrator of the Energy Information Administration, said earlier this week.

-- Wire services contributed to this article. Contact staff writer Bradley J. Fikes at (760) 739-6641