Gas prices drive big changes
in consumers' lives

Oil hits $100 a barrel; gas reaches new January highs


Gas prices were $3.29 a gallon in San Marcos on Wednesday.
WALDO NILO Staff Photographer, North County Times.

By: CHRIS BAGLEY - Staff Writer, North County Times

NORTH COUNTY -- Drivers winced on Wednesday as pump prices surged to levels never before seen in January, traditionally the off-season for gasoline demand.

Regular unleaded was going for an average of about $3.28 a gallon in North County and $3.32 a gallon in metropolitan San Diego on Wednesday. Gas prices in North County have risen about 55 cents a gallon since early January 2007, according to a weekly survey of 181 local stations for the North County Times prepared by the Utility Consumers' Action Network.

Crude-oil futures traded above $100 a barrel for the first time in history, prompting at least one pair of strangers to commiserate at the pump.

Drivers interviewed Wednesday said they had begun making bigger changes in their lifestyles over the last year, though long commutes and frequent fill-ups are still the norm.

Temecula-area resident Gary Shiebler said rising gas costs had driven him to buy a blue Ford Ranger pickup truck Wednesday morning and sell his Chevrolet Suburban, which he said used 14 miles per gallon.

"On a good day, with wind pushing it downhill," he added, as he filled the Ranger's tank Wednesday afternoon. "This Ranger will get 25 miles per gallon, and that's a big deal."

"We know gas is going to hit $3.75 or $4 a gallon," Fallbrook resident Dennis Rayford said, standing next to him while filling up his Nissan Maxima sedan. "I do very little driving now. We used to get out and go cruise. Now you have to think about how much money it's going to take."

And Shiebler and Rayford were getting off relatively easy. The Arco station at Washington Avenue and Escondido Boulevard was selling regular unleaded for $3.20 a gallon, mirroring two other stations across the intersection.

Analyst Charles Langley, who conducts the price survey, said that's probably not enough for a station to break even, given the wholesale price of $2.66 in Los Angeles and the various federal, state and local taxes that pile up on top.

Retailers, particularly independent dealers, are getting squeezed between rising wholesale prices and increasingly price-conscious drivers, he said.

The latest squeeze has come in the last week, he said.

Even refiners' profit margins have slimmed to a range of 30 to 45 cents a gallon from roughly $1 last spring, Langley said. Pump prices will almost certainly rise as refiners try to recover the earlier margins, he said.

Light, sweet crude oil for February delivery rose to $100 a barrel on the New York Mercantile Exchange on Wednesday, an exchange spokeswoman said, before it slipped back to settle at a record close of $99.62, up $3.64 for the day. Crude oil accounts for a little more than half the retail price of a gallon of gasoline, according to the Energy Information Administration; that portion has been edging up in recent years.

Rising energy prices were cited as a contributing factor in disappointing sales for the just-ended holiday season, along with the continuing slump in housing and an overall uneasiness about the economy. They could also make for a gloomy summer in San Diego County's economy, which is heavy on tourism and dependent on commuters, said Kelly Cunningham, an economist with the San Diego Institute.

"It will show up in the tourist attractions, the SeaWorlds, the zoos," Cunningham said.

Still, economists say the jump in oil prices is generally less devastating than previous surges because incomes have risen faster on average than energy costs over the last 30 years. Adjusted for inflation, California's gas prices in 1981 were comparable to prices drivers are paying today, according to data from the California Energy Commission.

Some analysts predict the booming economies of China and India will push oil prices well past $100 a barrel, eventually prompting consumers and businesses to cut back on their use of gasoline and products whose prices are tied to it.

Langley said that began to happen last spring.

"When we approached $3.50 a gallon, on average, consumers started caring," he said. "People are making long-term changes in their driving habits."

For many, those changes are only at the margins. Norb Schulz, a Borrego Springs retiree who drove into Escondido for lunch Wednesday, said he had sold his Toyota 4Runner in October and bought a Toyota Highlander, a smaller sport utility vehicle whose gas mileage is a couple of gallons more efficient.

"I've just got to work it in," Schulz said of the higher fuel costs. "We watch our trips -- always did."

-- The Associated Press contributed to this article. Contact staff writer Chris Bagley at (760) 740-5444 or cbagley [at] nctimes [dot] com.

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