It's Here — $4 Gasoline

  • Playlist
  • Download
  • Embed
    Embed <iframe src="http://www.npr.org/player/embed/89886033/89886704" width="100%" height="290" frameborder="0" scrolling="no">
  • Transcript

For San Francisco motorists, four dollars for a gallon of unleaded self-service regular is about to become the norm.

ROBERT SIEGEL, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

San Francisco is about to become the first major American city to average more that $4 for a gallon of gasoline. Right now, the official city average for a gallon self-serve, regular, unleaded hovers and $3.97, but many San Francisco gas stations are already charging more than $4 a gallon. NPR's Richard Gonzales reports - as you can imagine - Bay Area motorists aren't happy.

RICHARD GONZALES: There are two gas stations and the corner of 17th and Portrero(ph) in San Francisco's south of market neighborhood, so motorists do have a choice. They can pay $4.07 at this Shell station or a penny less per gallon across the street.

Ms. CHARLOTTE EMPI(ph): It's hared to believe it's over four.

GONZALES: The price makes Charlotte Empi wince.

Ms. EMPI: I hate it. I wish I had a Prius.

GONZALES: Does it change your driving habits at all?

Ms. EMPI: I probably try to combine trips more, lessen my commute as much as I can.

GONZALES: At another pump, John Plax(ph) says the gas prices encouraged him to leave his big Infinity at home while he and his wife get by with her VW Jetta.

Mr. JOHN PLAX: You know, actually we've been trying to minimize our driving for a long time - so we try to be more conscious about the environment for a long time and try to use public transit whenever we can. We're actually moving to a new home that's closer - right on the MUNI line, and one thing we like about that is access to public transit. It's a big deal for us.

GONZALES: In fact, people are using public transit more. Ridership on the regional transit lines, such as BART CalTrain is rising, but there are plenty of people who don't have a choice but to drive.

Mr. GREGG GOEBEL (San Francisco Cab Driver): Take a cab and make the cab driver pay for the gas.

GONZALES: Take San Francisco cab driver Gregg Goebel. He pays $100 a day to lease his red and yellow Crown Victoria. It gets about 12 to 15 miles to the gallon and it costs him an average of $50 per day for gas.

Mr. GOEBEL: I'm less willing ride for an order and I'm more willing to sit in a hotel line or a airport line, and count myself as having a good day if I spent less money on gas. Well if you do that, you're taking care of less people who live in the city. And you're not going to go out of your way to take care of somebody.

GONZALES: So what keeps him in the cab business? For one, flexible hours - means he's available to his 10-year-old daughter, and, he likes the work.

Mr. GOEBEL: Driving daytime, you're dealing with a lot of our seniors and our elders in this city. I help them to the door and I help them to the cab and they just think it's the greatest thing. And that's worth more than money to me.

GONZALES: Economists who study driver's responses to gas prices say, over the short run, consumers don't really change their driving habits. Chris Knittle(ph), and economist at UC Davis says Californians, like most Americans, are locked in their cars.

Mr. CHRIS KNITTLE (Economist, U of C Davis): That might be suburban sprawl, which puts us farther away from our jobs. The increase in two income earning families - where now we have two people driving to work instead of one. What I like to call the soccer mom effect - which is we… Rightly so, we feel that we have to drive our kids to more places than we used to.

GONZALES: It's not unusual for California to lead the nation in gasoline prices, but motorists here are already bracing for another milestone as the price of oil continues to soar. All of which leads cabbie Gregg Goebel to one conclusion.

Mr. GOEBEL: I tell ya, you know - we're heading towards five. It's just crazy. Hopefully gas will become a thing of the past.

GONZALES: Until then, California drivers are stuck shelling out at the pump and motorists across the country can get what may be a preview of prices in their future.

Richard Gonzales, NPR News, San Francisco.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.

Gas Prices Continue Climbing

The cost of gas reached a new high on Tuesday, escalating to a national average of $3.51 per gallon — almost 66 cents higher than the price a year ago. The sharp rise has been driven, in part, by the increase in the cost of crude oil, now near $120, and the declining value of the dollar.

The sticker shock may not end soon. Here's a guide to what's going on at the pump.

What's driving up prices now?

The falling dollar, the transformation of commodity markets into financial markets and steady global demand for oil are all contributing factors, says Mark Zandi, chief economist for Moody's Economy.com and an economic adviser to Republican Sen. John McCain's presidential campaign.

"Given the turmoil in the credit markets, investors are turning to commodities and oil as a trading vehicle," Zandi explains. "It doesn't take a whole lot of money" flowing out of the bond or stock market and into oil or natural gas to drive up prices.

Typically during a recession in the United States, demand for oil falls because people make a conscious decision to drive less. But any decline in U.S. fuel consumption has been offset by greater demand for all kinds of fuel in emerging economies, which Zandi says are doing well and therefore contributing to the price escalation.

Strong global demand is likely to increase, not decrease, pressure on U.S. gas and oil prices. "China, India and other developing countries [that] are developing their economies –and a middle class — just keep putting more pressure on the supply of crude oil to turn into energy for themselves," says Jim Boyd, vice chairman of the California Energy Commission.

Is there any chance prices will fall soon?

No. Gas prices are rising quickly. At the beginning of the year, a gallon cost $3. Analysts and economists view the rise to more than $3.50 as a step along the way to prices that may exceed $4.

Is any relief coming?

Last week in Congress, Sen. John McCain proposed suspending the federal gas tax between Memorial Day and Labor Day this year as a measure of relief for consumers during the height of the driving season. The federal tax is 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel.

The question to ask about such plans, says Billy Pizer, an economist with the Washington, D.C., think tank Resources for the Future, is how much of the money will flow into the hands of consumers versus corporations.

Some economists say that suspending the tax will only promote greater consumption and drive prices up — sending more money to oil producers, not consumers.

Are Americans feeling particularly squeezed because oil is priced in dollars and our currency is weak?

Zandi says the downturn in the U.S. economy, which he believes is in a recession, is taking a toll in a variety of ways.

"Nothing is going right for consumers in particular," says Zandi. "We're losing jobs, the stock market is down. House prices are falling. Gas and food prices are rising. It's all very debilitating, so the higher gas prices hurt more in that kind of context."

Will prices drop once the summer driving season ends?

After summer, gas prices typically do fall — but it depends on the price of crude oil, economists say. In the fall, the problem may shift – especially for consumers in colder U.S. regions —to increased costs for heating homes.

The Southeast, with a larger concentration of lower-income households, is typically hardest hit by rising gas and oil prices because residents spend proportionately more on energy, says Zandi.

Will we ever return to gas at $2 a gallon?

It's unlikely, especially in the near term.

"Every penny increase in the gasoline costs the American consumer $1 billion annually," says Zandi. "If we go from $3 to $4 that means $100 billion in extra cost."

Will the current pricing scenario hasten the use and development of new fuels and vehicles?

As more consumers feel pinched at the pump, their discomfort may spark individual and corporate action. "High prices in the market create responses on both the supply and demand side for fuel," says Pizer. This translates into consumers trying to save gas by driving less or searching for cars with higher fuel economy, he says. On the supply side, companies may turn to conventional sources for fuel that were not profitable in the past because they were difficult to obtain, unconventional sources that may have higher production costs or alternative fuels, he explains.

"I do feel sorry for the American consumer," says Boyd. "We've predicated our lifestyle on almost the God-given right to cheap gasoline. It's a rude awakening — a permanent awakening — we've got to have a mixed portfolio of transportation fuels. And we have to have more efficient motor vehicles."

Why are gas prices higher in California?

Since the early 1990s, to comply with federal law and its own stringent air quality standards, California has produced and utilized a different blend of gas that is more costly to produce. On Tuesday, the California retail price was $3.86, according to the California Energy Commission — 35 cents higher than the national average. Boyd attributes a third of the price difference to production costs. The remainder, he says, is because demand exceeds supply.

Material from The Associated Press was used in this report.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.