Wed10222014

On The Road

The cost of gas drops briefly, then stations pump up prices again

Clyde on Cars

For the week of March 15-21, local gas prices actually came down.

However, it didn't last long. On March 22, gas prices made a U-turn.

In many stations, prices appeared stationary at $1.29 for the 87 octane, $1.39 for the 89 octane and $1.49 for the 92 octane, or what some oil companies call high-test performance gas.

In checking different cities adjacent to Los Altos last week, BP (British Petroleum) in Cupertino was selling gas for an average of $1.23, $1.33 and $1.43.

This is 8 cents cheaper than the Chevron station in Los Altos just three blocks away. In Sunnyvale, gas was available at an average of $1.21,$1.31 and $1.41.

Los Altos gas station prices were higher than any other city in the area, with the Texaco station at Rancho Shopping Center having the highest price in the city.

What's ironic is Venezuela, Saudi Arabia and Mexico announced March 22 they would cut back crude oil production due to a glut on the market. Other oil-producing nations agreed to reduce production the next day.

On Monday, crude oil jumped from $13 a barrel to $15 a barrel. Then Tuesday of the same week, gasoline prices at the pump went up. In some places more than 5 cents a gallon. Are supply and demand prices reflected that fast?

Gas was selling for around $1.08 a gallon nationwide, and states like Florida sell the 87 octane for under a dollar all year-round. Motorists throughout the United States have been buying fuel for as low as 90 cents a gallon during the past few weeks.

Californians still pay one of the nation's highest gas prices in part because excise and sales taxes are the highest in the nation. Oil companies also pass on to consumers their expenses in producing cleaner burning gasoline to meet California environmental laws.

In California, Chevron has close to 20 percent of the market. Atlantic Richfield (Arco) is close with 19.1 and Tosco Refining (Union Oil) is the third producer with 17 percent market share. Shell has 11 percent, Mobil 9.4, Exxon 7.2 and Texaco 7 percent. All others, which include BP and Bekins have only 2.4 percent of the market but the lowest prices at the pump..

The Energy commission said gasoline prices in Southern California are lower than in Bay Area communities because competition among retailers is more fierce down south. They have more stations per square mile and per customer.

In Northern California the cost of doing business is higher because real estate is higher and available sites for gas stations are few.

The companies with the largest market shares have the highest prices at the pump because they are the price leaders.

This explains why Los Altos gas prices are higher than other cities. There are three Chevron stations in Los Altos and the gas prices are usually identical at all three.

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