Not trying to doom and gloom anything but with oil exploring new lows, around $50 a barrel, I got to thinking about the price of gas. Here in good ol' silicon valley about the cheapest I see without bizarre shopping around for premium is 2.69 a gallon but it is not that hard to pay over $3 a gallon for it as well. If we stabilize here we are at what, 30% above the pre hurricane shock? That means if there is another shock, from anywhere, at least here in Cali we are going to get very up close and personal with at least $4 a gallon premium. I am amazed how comfortable people have gotten with the price of gas now. Maybe the oil companies have it figured out better than we do and can play the oil shocks well and they know just how far to push and then give us a chance to get used to it and then ratchet it up again.

It is affecting my car purchasing decisions. I may get one model that is in the herd at 20 mpg but I am not going to have two in that range. Anyone else been noticing this or is premium back down to $1.50 in the other parts of the country?

 

Come on, RON....with crude oil at $50-55 a barrel you're not going to see premium at $1.50. You might see it, fairly soon, maybe around $2.30 or so....with regular 87 around $2.00 ( if the oil pundits are correct ) ......outside of places like CA and NYC.

But.......to be honest.......you are living in one of the worst states in the country for high gas prices.....even more so in the SoCal-L.A. area. Why? Two main reasons. First, the high CA taxes. When you live in a socialist, tax-and-spend state like CA you pay the price for it....literally. The second main reason is CARB...the Cailfornia Air Resources Board. CARB requires special blends of fuel for low-emissions that go even over and above what the Federal Government and EPA require. These blends are confined mostly to CA and a couple of places in the Northeast, so they are not very cost-effective. The oil companies have to charge higher prices there than for the rest of the country because it is not only more expensive to produce but loses money from the economies of scale as well.

Yes, taxes can make a BIG difference. Right here where I live is a good example. Gas right across the river, a couple of miles away in Washington, D.C. and Montgomery County, MD averages about 20-25 cents higher than right in my home town of Vienna, VA and Fairfax County, where I live? Why? Simple. D.C. and MD charge substantially higher gas taxes than VA.

So, you will probably see at least some price drop in the weeks ahead.....but don't expect CA gas prices to be like TX or OK.

 

The lowest premium gas prices gave been since the Katrina spike of up to and over $4.00 a gallon here in my state has been about $2,89 a gallon. Prices went back up to $3.00+ a gallon a few weeks ago. At least even in California they get to see a dip in gas prices. For the last 2 years almost we rarely ever drop below $3.00 a gallon. Believe it or not I'm on the cheap Island as well. The other Islands in the state are generally higher by about 10-20 cents.

 

Aw come on mmarshall, I never expected to see $1.50 a gallon premium but when I talk to people around the country, there are some pretty big disparities in gas prices (sort of sensitive, relatives live in St. Louis and they make us Californians green with envy but then we aren't chipping our way out of our driveways right now). But my comments weren't based on the Cali formulations that drive higher prices, as well as a business unfriendly environment for adding refining capacity either. Both are well known to anyone interested in cars with a body temperature over 50 degrees. It is just that we peaked at what, roughly $70 bucks a barrel for oil and that is when, at least here in Cali, we saw maybe $3.20 a gallon for gas. Now if you watch gas prices for more than a few minutes, it is evident that they never, ever go down as fast as they go up, but if the new relationship is, at least here in Cali, premium at $2.70 gal to oil at $50 a barrel, then any shocks are going to be unpleasant if you are driving the typical 20 mpg car which is what it seems like most models are stuck in.

I guess I was amazed that when gas went over $3 a gallon with the windy reasons, there was some real interest in getting mileage improvements. But now everyone seems to have adapted to this pricing. The pols make moves to just make gas mileage numbers from EPA more releavant, note, not make them tighter just make the printed numbers more accurate, and Bobby Lutz can't wait to get in front of a microphone to say that this would be handing the truck market to the foreign competition. Don't know why that surprised me, I doubt Lutz and GM have ever really looked at the compeition. If he saw a new Tundra or Titan he would give up notions that the import pick ups are gas sippers.

Then again, I guess we just wait for the next oil shock and watch all those fools trading in their Hummers and AMGs for hybrids. I'm not an eco terrorist but man are we vulnerable to gas prices. Maybe it's just me not being quite so anxious to put 50 or 60 or 70 bucks of gas in one tank in my GS. On the other hand, the quicker we use the oil up, the less we have to be concerned about what goes on in the middle east.

 

Just curious, what do you think will happen with the attempt to regulate gas prices in HI? Anyone who has ever vacationed there knows about the prices and you can make some rationalizations about the transportation costs but it seems like the legislature is really buggering this up with trying to get trade secret pricing info from the two big suppliers and then use their own data to clobber them. Seems like an amateurish approach IMO. I don't mind looking at regulating but from the little I have read, it seems like somebody over thinks the oil companies are really dumber than dirt to reveal that data without a long time in court. Just wondering if the admittedly few stories I have been able to read are full of whooee or not.

 

Large SUV sales DID drop when prices were very high last summer, but then the price dropped enormously between July and November...over a whole dollar in my area. The causes for that drop have have argued and debated back and forth here at CL...everything from a supply glut to a drop in demand to the election coming up to just a general price war for market share. WHATEVER the reason.....the price did drop very rapidly, rise a little after the election, come back down slightly, then rise slightly again, and now appears headed for a significant drop........perhaps to $2.00.

There does seem to be a shift to smaller cars, though, and particularly to hybrids, even with gas prices down. And a warm winter in the East ( which may now be over..the cold has finally reached the East Coast ) has helped prices even more...several ways.

Americans, though, no matter what the price of gas, high or low, will do just about anything before giving up their cars and driving. Heck, look at US.....the perfect example ( even though I use the D.C. subway ) . We can't even stop TALKING about cars, much less driving them.

 

Rumor has it we will see a drop, but it "takes a while" or so they say

That said, I don't think we learned our lesson here - and that is, we need to get more fuel efficient and FAST.

I'm all for the enviornment, but our government mandating that diesel "cars" have the same EPA ratings as the gas "cars" for 2007 is bull. We lost every diesel car except for the E320 for 2007. Car mfgs were one year away from hitting the target - how about an exception?

Oh and yes, I do drive a V8 car - but I would have seriously considered a twin turbo diesel if it had been available.

 

That piece of legislation was repealed. It never worked. Even if it did work, it was introduced a few months before Katrina, so gas prices skyrocketed anyway. Public outcry was harsh since during that year we were paying an average of 20+ cents above the national average I believe. When prices in the mainland went down, it would takes weeks before it dropped here, and only by a few cents unlike the 10-15 cent drops on the mainland. I think we are just screwed here because of the lack of choice and competition. There is only one refinery here in which I believe all the gas companies get their supply from. Actually, I think there are two. BHP and Chevron, but they know they are the only game in town so they alway manage to have the same prices. There really is no competition between them.

 

This is true, but there are also people that simply can't afford to give up there cars. We have only one form of public transportation here which is the bus. The last city bus runs end around 11PM. If you work later than that or work after that you have no choice but the drive. Not too mention using the bus system will add about 2 hours to your daily commute. Can't really ride a bike to work since if you live on the other side of the Island, you can't really ride a bike over the mountain nor is it safe at that hour. As much as I love to drive myself, I ended up buying a moped to ride to work. It uses a 1.5 gallon gas tank and gets about 60-70 MPG. I know only spend about $2.50-$3.00 on gas every two weeks At least for work commutes.

 

Well, there may not be much competition, but at least you're not buying junk. Chevron is arguably the best brand of gasoline currently on ther market, with the well-known detergent benefits of the Techroline package.

 

Except after last April (2006) our state mandates 10% enthanol in all grades and brands of gas.

 

Fine. Ethanol is a good detergent and will help keep the engine clean. It will NOT harm newer engines or fuel systems as long as the concentration does not exceed 10-15%. For more than that that you need an E-certified engine......such as GM's E85's.

But ethanol also has less B.T.U. energy than gasoline, so you might notice a slight drop in mileage.....maybe 1-2 MPG.

 

Hmmmm, I think Ron works for MSNBC!!!!

http://www.msnbc.msn.com/id/16676018/

 

Crude oil is a part of the end user price for gasoline, but it's not the most important part. The price of crude oil is not the only reason for the spike in gasoline prices - a bigger concern is refinery capacity. Sure, the price of crude has a lot to do with it, but the fact of the matter is that there hasn't been a new refinery built in the U.S. in 20 years. That, combined with the increase in consumption and increase in price of crude base stock is what has driven up gasoline prices. Three months after Katrina, the supply of crude in the U.S. was exactly the same as one year before Katrina, yet gasoline prices remained high... Also, the issue that crude oil futures have now become an 'in vogue' investment for hedge and mutual fund managers has exacerbated the volatility of crude oil futures.

And for you California people, it's even worse. The CARB issues have already been discussed. Does anyone remember the BP fiasco from August of last year? That pipeline is responsible for 8% of the U.S. crude oil supply, and a much larger percentage of the west coast and pacific U.S. oil supply. California gets about 20% of it's crude oil from that pipeline that was shut down last year. Since it went back online, there have been more leaks, problems, and even vandalism. All this has an immediate and future impact on the price of crude (and indirectly gasoline) on the west coast.

Javier

 

Hey Doug, I like to think I am too moral to work for the media.

Two weeks ago oil was going to break into the 40s and all those Suburbans starting surfacing around here. Now oil sure looks like it is ready to get back into the 60s (and this is because of concerted cutbacks and some cold weather, not the return of heavy driving demand that is right around the corner). Forget whatever I said about the price of gas not falling in concert with the oil price. The question now will be when it starts to head back up, which is probably right around the corner. Exxon has some big numbers to show increases on year over year this year.