Industry blames jump in crude oil prices and distribution
problems for rapid price hikes
GILROY – Garlic Town is not immune to a ruptured gas pipeline in Arizona, increased demand for oil in Europe, distribution disruptions on the East Coast nor warfare in Iraq. And the prices Gilroyans are paying at the pump are proof of this.
Based on an informal survey of nine Gilroy gas stations, Gilroyans are paying 11 cents per gallon more than the average California and San Jose resident for regular, unleaded gasoline. Commuters, business owners and gas station operators reacted Tuesday to yet another hike in the gasoline prices that began skyrocketing last week.
“I passed by the station the other night on my way home from work and I said, ‘I’ll fill up tomorrow.’ The next day the price went up 5 cents (per gallon),” said Kathleen La Brie, a Gilroy resident who commutes to Palo Alto for work.
“This really is crazy. I drove up today and saw the price went up again. I just said to my daughter ‘What do you think their excuse is this time?’ ”
The excuse, the American Automobile Association says, is a “perfect storm” of crude oil price hikes and distribution problems in the United States and the world. From the ruptured Arizona pipeline to disruptions in an Iraqi pipeline, suppliers are finding it harder and more expensive to get gasoline to market.
The result – prices around the state that have been increasing steadily each day this past week and figure to rise through Labor Day, industry and government officials say.
Last week’s East Coast blackout is largely responsible for the continued gas price hike since seven refineries in Michigan, Ohio and Canada were temporarily shut down by the power outage, according to the Energy Information Administration.
At the beginning of the day Tuesday, the national average price for regular, unleaded gas was $1.61 per gallon. By the afternoon, the cost had risen to $1.627 per gallon.
Gas stations all around Gilroy have been hit by the increased costs. AmeriGas, formerly Union 76, had one of the most extreme cost increases. On Monday, unleaded gas was priced at roughly $2 per gallon, said a clerk at the station on the corner of Tenth and Monterey streets. By Tuesday morning, customers were paying $2.19 each gallon.
AmeriGas management could not be reached for comment before deadline.
Gilroy resident and businessman Tom Harrison said the $2.04 rate he was paying to fill up his SUV at the Chevron station on First Street and Westwood Drive wasn’t anything to worry about. But Harrison is concerned how the gas hikes may impact his tree-trimming business.
Harrison’s business has two tree-trimming trucks and one wood chipper that need gasoline to operate.
“It’s another cost that every month I have to pay off,” Harrison said. “When the price jumps to $2.04 for regular gas, there’s less left over and it hurts.”
Last week, Harrison could have filled his tanks at a rate of $1.83 per gallon at the same Chevron station, Assistant Manager Wayne Tran said.
“Every time there’s a new truckload, we get an e-mail with the new price, and it just keeps going up,” Tran said. “People need to drive, and people need to put gas in their car to drive, and we have to cover our costs.”
Tran said he has seen no change in business since the gas prices started to skyrocket last week.
“Maybe our local business is less, but we get a lot of customers who are tourists,” Tran said. “People still are taking vacations and going to the Outlets and passing through Gilroy.”
More such visitors may be on their way. The AAA predicts that 33.4 million Americans will hit the road for the Labor Day weekend, representing a 1.8 percent increase in travelers from last year.
“Travel could be the highest in the last 10 years,” AAA spokeswoman Cynthia Harris said.
Harris said the increase is likely due to the early arrival of Labor Day, Sept. 1.
“When the holiday weekend falls in August, you have a combination of August vacationers and Labor Day travelers on the road,” Harris said.
