Gas hits all time high, drivers weary

March 3, 2008 9:28:40 PM PST
Drivers may decide to step on the brakes after hearing crude oil traded at its highest level ever on Monday, even with adjustments for inflation. Gas prices, which are already soaring, are sure to continue rising.

Oil prices began fluctuating toward the end of last year, before going on a tear in January that shows no sign of ending. Crude closed at $102.45 Monday, after climbing to nearly $104 earlier in the day.

Gas consumption across the country has dropped 1.1 percent in the past six weeks. That doesn't sound like much, but it's the longest falloff in demand in nearly two decades. Gas customers say they're at the breaking point and might stop driving if prices keep rising.

Left Coast Cyclery in Berkeley says they've noticed more interest in commuter bikes, including folding models that can be stowed at Bart stations.

"I think people are starting to realize that the gas prices are getting up so high that it's even hard to maintain their car all the time," says Jason Clarke of Left Coast Cyclery.

Crude oil prices hit $103.95 a barrel -- the highest price ever, taking inflation into account.

Pump price increases can be really dramatic. The prices went up five cents a gallon Monday at a Berkeley gas station. We were in San Francisco last week, where the prices went up 10 cents in a single day.

Severin Borenstein is the director of U.C.'s Energy Institute. He says it's not speculators driving up prices -- it's limited supply.

"Supply is pretty constrained in the long run because there's a limited amount of ability to push oil out of the ground, and then Saudi Arabia is the one country that still has extra capacity, and they're choosing not to produce that so Saudi Arabia is holding some of their capacity off the market in order to keep prices high," says Borenstein.

Borenstein expects prices to stay in the $90 and $100 range for the foreseeable future.