Gas prices rise dramatically in Bay Area

March 10, 2008 9:05:19 PM PDT
The rapidly rising cost of fuel is only making matters worse. The price of crude oil reached new heights. It traded as high as $108 and closed at a record level of $107.90 on Monday afternoon. That's a one day jump of $2.75 a barrel.

As for gas prices, they're up almost 60 cents from a year ago nationwide. As of Monday, it's $3.71 a gallon in San Francisco and $3.59 in San Jose and these prices are crippling our economy.

If you think oil at $107 a barrel isn't shocking enough, the investment bank, Goldman Sachs, is predicting oil could almost double to $200. The higher oil and gas prices go, the rougher it is on consumers, who often are asked to help flip the bill. As a result, of that it is having an effect on a wide range of deliveries, from food to flowers.

"I kind of cringe when I answer the phone because I'm not sure how the customer is going to take it," says Hoogasian Flowers owner Larry Hoogasian.

Hoogasian owns one of the city's oldest and largest floral businesses. With five trucks making deliveries and gas prices rising almost daily, he had to make a tough and unpopular decision.

"We had to raise our price $10 per delivery. It went from $20 to $30."

Other cost-cutting measures are in place. Gas prices are checked online daily to find the best prices and drivers are told where to fill up. It costs about $100 to top off these delivery trucks.

Indeed, everyone is feeling the squeeze, from taxi drivers, to independent truckers hauling cargo haulers.

Commuters do have alternatives, but it may be too early to see a switch away from single-driver cars.

The Oakland based 511 Regional Rideshare Program says it saw car pool inquiries jump from 100 to 130 in a week's time last month.

"Price sensitivity is really their main motivator, whether it's saving money on gasoline or saving money on bridge tolls. That is the biggest motivator to get people in car pools," says Kit Powis of the 511 Regional Ride Share Program.

However, Caltrain, which runs along the Peninsula, and BART say they haven't detected any up tick because of rising gas prices.

The investment bank, Goldman Sachs, warns a disruption in oil supplies or a sharp turnaround in the U.S. economy could cause oil prices to reach $150 to $200 a barrel.

Stanford energy analyst James Sweeney says a weaker dollar could also raise oil prices.

"If people believe that the U.S. dollar is going to continue to drop in value, then the prices they are willing to pay in the future, denominated in dollars, will be higher just to account for the exchange rate differential," says Sweeney.

Bay Area commuters can be glad about one thing: Gas prices haven't been rising as fast as crude oil prices. It's because two key reasons ? gasoline supplies are inching up slowly, in anticipation of higher summer consumption and U.S. gas consumption has fallen ever so slightly in the past month -- just under one percent.