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For immediate release: March 3, 2003
Media Contact: Rob Schlichting - (916) 654-4989

Energy Commission urges drivers to
shop around as gas prices reach new high

Sacramento - The average price of regular gasoline in California broke the two-dollar barrier last week.

While regular gasoline averaged $2.01 statewide for the week ending March 3, 2003, retail prices varied as much as 30 cents a gallon from station to station. "That's why we're recommending that motorists shop around and buy the least expensive gasoline they can find," said Bill Keese, Chairman of the California Energy Commission. "Not only will consumers save money that way, they will be encouraging gasoline retailers to lower their prices."

Regular gas on average now costs 43.5 cents a gallon more than it did the first week of January, 2003, and 68 cents more than it did at this time last year. However, when prices are adjusted for inflation, gasoline has been more expensive in the past. Average pump prices of $1.34 a gallon in 1981, for example, equate to $2.45 a gallon in today's dollars.

Most of the current price increase in gasoline - 39 cents worth - is due to world oil prices that nearly doubled over the past year. In an extremely volatile market, crude oil prices have soared because of uncertainty about supplies from the Middle East - the so called "war premium" - as well as oil supply problems in Venezuela and Nigeria. In addition, continuing cold temperatures in the east have increased the demand for heating oil, increasing the competition for available oil supplies.

Additional factors are at work as well in California. Several refineries are off-line, performing planned yearly maintenance, tightening supplies and increasing prices on the spot market.

Energy Commission analysis indicates that cost and profit margins for both refiners and local retailers are now higher than the historical average. Profit taking at the pump results in the wide disparity in prices from station to station. "But in a free market economy, if consumers avoid the highest price gasoline, those retailers will have to lower their prices to remain competitive," Keese explained. Oil and gasoline were deregulated in the 1980s, and government does not regulate prices.

He also urged drivers to avoid paying for midgrade or premium gasoline if their vehicle was designed to operate on regular gas. More than 80 percent of the vehicles on the road today run best on regular, which can be 20 cents a gallon less than premium blends.

Carpooling, consolidating trips or taking mass transit instead of driving will also save consumers money, reduce pressure on fuel supplies, and help to bring the retail price down.

The Energy Commission has other tips to help motorists cut fuel costs, such as keeping your tires properly inflated and your automobile tuned. You can find them on-line at

www.consumerenergycenter.org/transportation/conventional/tips.html


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