Cost of fuel heading higher

0 Comments | Oakland Tribune, Jan 11, 2006 | by Francine Brevetti, BUSINESS WRITER

So much for cheap gas.

After falling since October, gas prices have reversed course, increasing by 13 cents a gallon in the past week, according to a report Tuesday from AAA of Northern California.

The average statewide price in California for regular unleaded gas is now $2.36 a gallon, or 40 cents more than the average Californians were paying a year ago, AAA said.

The Bay Area's average gas price rose 6 cents in the past month to $2.28 a gallon, with Pleasanton up 3 cents to $2.22, Fremont up 5 cents to $2.29, Oakland up 5 cents to $2.33 and San Mateo up 6 cents to $2.38.

Meanwhile, the price of crude oil, the raw material from which gasoline is made, has jumped to $60.70 a barrel on Monday from $39.21 a year previously, according to the California Energy Commission.

"We often see price increases in January," said AAA of Northern California spokesman Sean Comey. "What's particularly troubling for consumers is that the average gas price for the first month of 2006 is starting at a much higher level than it did a year ago."

Calling this new benchmark "disappointing" for consumers, Comey said that with the price fluctuations that consumers have been through in the last two years, "Anytime we get near the two-dollar mark, we seem to feel less pressure."

He attributed the jump in gas prices to the jump in crude oil prices. Every dollar increase in the cost of a barrel of crude results in a 2.5 cent per gallon increase in consumer gas prices, he said.

However, the California Energy Commission has reported that state refinery output is healthy for this time of year and is up by nearly 2 percent compared with the same time last year.

Commission spokesman Rob Schlichting said the world price of crude has gone up because of tensions over the Iraq war, and the increased energy usage of India and China. Also, "This is the time of year when our domestic refineries do their maintenance" and therefore shut down, cutting production, he said.

The nation's most expensive gas is $2.96 a gallon in Wailuku, Hawaii, AAA said. The U.S. average is $2.32.