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How did gas get to be $2 a gallon?
Experts point finger at OPEC, consumers
SAN RAMON, California -- Gas prices here just blew through that imaginary $2-a-gallon limit.
Debra Sturmer shelled out $31 to fill up her Volvo. "This may be the last time I fill up this year," she says.
How did we get here?
Blame OPEC and ourselves, the experts say.
"As we have bought more and more SUVs and gas guzzlers, gasoline has been cheap for quite a few years," says Professor Severin Borenstein at UC Berkeley's Energy Institute. "That has pushed up demand."
Also, much of the present boost in prices came directly from the jump in crude oil pricing by the Organization of Petroleum Exporting Countries.
Breaking down the price
When crude sold for $11 a barrel, gasoline cost 26 cents a gallon. When crude increased to $32 dollars a barrel, gasoline sold for 76 cents a gallon -- a 50-cent increase.
Most Bay Area stations in California sell regular-grade gas for about $1.97 a gallon. Here's how that price breaks down:
Basic case of supply, demand
Dave Heck, manager of marketing and government affairs at Chevron, says the OPEC clampdown was easy to predict -- and the result easy to forecast.
"When you start restricting production on one side and see demand increase on the other side, the only thing that can happen is for the prices to go up," Heck says.
Americans, in comparison to those in other industrialized countries, are used to bargain-priced gasoline. And when price spikes come along, so do the howls of indignation.
Jeff Nathan scowls as he fills up his company's van.
"It's irritating," Nathan says. "I mean, when these people (the oil producing countries) have problems in their country, we fight their wars, and as soon as we get done fighting their wars, our gas prices go up."
California is costliest at the pump
Gas prices are going up worldwide, but within the United States, California takes the lead.
Last fall, California Attorney General Bill Lockyear investigated accusations of price-fixing among California's oil producers. He didn't find any. But his report cited three major factors in the state's consistently high gasoline prices.
Borenstein says it also has too few refiners.
"There are only six producers, who produce a vast majority of the product we consume in California, and that ... reduced competition has led to exacerbation of the price spikes."
There are also fewer places to buy gasoline. The actual number of filling stations in California has gone down by 14 percent in the last decade.
Less consumption could lower prices
So what is a consumer to do?
Travel by other means, advises Professor Borenstein.
"If people really want to affect the price of gasoline, they have to do so by actually consuming less," Borenstein says.
Debra Sturmer says she might park her Volvo for a while.
"This may drive me to use public transportation."
Gas prices may not peak for weeks
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