Oil up more than $10 to new record high

June 7, 2008 1:05:56 AM PDT
Oil prices made their biggest single-day leap ever Friday, dragging the Dow Jones industrials down nearly 400 points and raising the once-unthinkable prospect of $150 oil and more record gas prices by the Fourth of July.

On the day oil made its record jump, drivers in Berkeley were starting to ponder other modes of transportation.

"I will get a horse or do something else," said John Rieger, a Petaluma drive.

Others were more serious, like Steve Baum, who runs three trucks for his business installing windows and glass.

"I personally drive around a lot to visit jobs, so it's starting to hurt. It's starting to hurt. We're going to have to raise prices," said Baum a Berkeley business owner.

There's a lot of that going around and gas prices are expected to surge even higher after oil prices shot up.

There are a few explanations as to why prices jumped up. One is that some have jitters from a newspaper report saying that Israel is threatening to attack Iran. Then a major Wall Street firm predicted that oil would hit $150 a barrel by the Fourth of July. That's an idea which some analysts think is just a lot of hot air fueled by speculators making quick profits every time the price spikes.

"We believe it's driving the market psychology, but in fact may not be in alignment with the realities of the market," said Robin West from PFC Energy.

Here in the Bay Area, the average price of a regular gallon of gasoline is around $4.40, according to AAA, which is why John Rieger of Petaluma relies on motor scooters as much as he can.

"I don't see the gas prices coming down so that's what I do. I ride a scooter," said Rieger.

"Are we angry at companies that make large profits?" asks Jim Bushnell with the UC Energy Institute. "I think it's safe to say the oil companies aren't driving up the crude oil price in the world market today. They just don't own enough oil to do that. That doesn't mean they don't benefit from high oil prices, because they own oil."

He expects average pump prices to jump to $4.50 a gallon in the next several days, hitting smaller gas stations first and then spreading to the big names.

"What can I do about it? I can't ride a bike to work, I got to take children to school in the morning, and then I have to go to work, but leave it in God's hands, it'll be all right," said DeAndrea Achawu, a Berkeley driver.

ABC7 Futures Market question: Will the price of gas hit $5 a gallon in the Bay Area by the end of 2008? click here to play


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