Political unrest in the Middle East gets a lot of the credit for this spring’s record gas price surge. The turmoil pushed oil prices above $100 a barrel and that swelled the price of gas at San Diego filling stations. The $4 plus price for a gallon of gas squeezed the region’s fledgling economic recovery and family pocketbooks.
“We’re already on a tight budget because the economy has made it possible for me to change my lifestyle. Not in a way that I necessarily want to,” said Sandra Blakley of San Diego. “But when things are already tight, that’s getting into food money and travel money and movie money. You know, all the little extras that we enjoy.”
Just a couple of islands over, another pleased driver was looking at his gas pump to see the damage.
“Yeah, its like about $5 cheaper,” said Vincent Bungay of La Mesa. “Usually it’ll hit about the $70 mark. I usually will wait until it gets empty because I drive an SUV.”
It has been a good month for San Diego drivers.
Prices at local gas pumps are dropping about a penny a day since the peak price hit on May 5th. On that day it cost $4.25 cents for a gallon of regular gas. And the decline is happening even though the price of oil hovers close to the $100-a-barrel mark.
“Watching and tracking the movements of crude oil is probably the best indicator of where retail gasoline prices are likely to go in the near future,” said Tupper Hull of the Western States Petroleum Association.
That’s because oil represents about two thirds of the price of a gallon of gas. Taxes and profits make up the rest. But the price of oil is really just a prediction. Thousands of traders, acting independently of each other, collectively set the price of oil, by buying and selling it at a given price.
“When there is concern about supply tomorrow, or concerns that the cost of crude oil might be more costly tomorrow, people are willing to pay a little more for it today,” said Hull.
Oil prices soared this spring on fears supplies would be disrupted, but prices stayed high even though there was always enough oil. That’s because the price of a barrel of oil today is really what those traders think the price will be down the road. Some call the system arcane.
“What they’re doing is they’re saying, 'we’re going to charge you the future’s price for oil today,' ” said Charles Langley, consumer advocate at the Utility Consumer’s Action Network. “So a price that’s 30 days in the future is what you’re paying for gasoline now.”
It is a system that costs consumers money that many people can’t afford to spend.
“It's just gotten too expensive,” said Langley. “And a lot of people have tried to ride out the storm by charging gas purchases to their credit cards and now they’re paying huge interest rates and it really has a ripple effect through the whole economy.”
Higher prices are pushing down the demand for gas and that will continue to put downward pressure on the price of fuel. Lower prices are, of course, welcome news to San Diego drivers.
“I’m hoping as it goes down that I can do a few more things,” said Jackie Lee. “It doesn’t seem like it would be very much, but going places out of the neighborhood, now I think twice about doing that.”
Even with the recent declines, gas prices remain 20- to 25-percent higher than the price drivers paid last year.
