Published Thursday, March 2, 2000, in the San Jose Mercury News

Worst yet to come on gas prices Experts predict $1.80 or more for regular in South Bay by April 1, then a leveling off

BY STEVE JOHNSON Mercury News Staff Writer

Silicon Valley motorists who have been jolted by recent record high gas prices should brace themselves to pay $1.80 a gallon -- or even more -- in the next few weeks.

Industry experts think unleaded regular, which now averages $1.52 a gallon statewide, is headed toward $1.70 or more by the end of March. That means the price in the South Bay, which is now at $1.66, could exceed $1.80, before leveling off.

Some San Francisco stations already are charging more than $2 a gallon, and at least one expert believes that could become more common in places like Palo Alto and San Francisco, where gas tends to be particularly costly.

``I definitely see $2 a gallon at the rate it's going up,'' said Dennis DeCota, executive director of the California Service Station and Automotive Repair Association. ``I think it will go up over the $2 mark.''

OPEC's recent decision to cut oil production has been singled out as the main cause of higher prices, and the shutdown of several West Coast refineries has aggravated the problem. Still, most industry analysts think the situation will improve soon.

Most of the idled refineries are expected to begin operating again in the next few weeks. Moreover, U.S. Energy Secretary Bill Richardson said Wednesday that he was confident OPEC would soon agree to a ``substantial'' increase in oil production when it meets on March 27.

To encourage the cartel to begin pumping more, some members of Congress on Wednesday demanded that the Clinton administration cut off U.S. assistance and arms sales to OPEC members. Other lawmakers urged the White House to use some of the 570 million barrels of crude oil stashed in the Strategic Petroleum Reserve to help ease gas prices.

As a result, ``I don't think this is going to last,'' said Scott Berhang, editor of the Oil Price Information Service in New Jersey. Although the average price should go up a few cents more over the next three weeks, he said, after that, ``I think it's going to level off.''

Herb Richards, chairman of Coast Oil, which operates 28 Rotten Robbie gas stations in Northern California, agreed. He thinks the average statewide price could hit $1.70 over the next few days, but then quickly drop to about $1.60 after the refineries that were shut down start up again. ``Most of them say they'll be up and running by the end of the week,'' he said.

Even so, the recent rise in prices -- and predictions of more increases to come -- have left a lot of local motorists feeling vulnerable and bitter.

Motorists hurting

``It hurts me a lot,'' said 44-year-old Sawaran Kaur of Union City, as she was filling up her Dodge Caravan at a Chevron station at North First Street and the Old Bayshore Highway in San Jose, where the cheapest unleaded was going for $1.69. Kaur's job involves driving all over the Bay Area delivering title documents. She said she has to pay for the gas herself.

She fills up her vehicle every other day and would have a hard time if prices reached $2 a gallon. ``That's too expensive for me,'' she said. But she'd probably have to pay it, she added, because ``I can't stop my work.''

Doreen McCoy, 50, of Pleasanton, who was filling her Mercedes 300E, said she'd be forced to pay whatever it cost, too, since she depends on her car for her job as a sales representative for Pacific Bell.

``I don't think we have a whole lot of choice,'' she said. ``I can afford to buy it. But I wonder about the poor people, the people who can't afford this. What does the average consumer do now?''

They might consider being grateful that things aren't a lot worse, said Robert Schlichting, a spokesman with the California Energy Commission. He noted that despite the recent rise in prices, which he expects to level off in few weeks after going up another dime or so, ``we've been enjoying gas that was a little cheaper than theoretically it should be.''

After all, he said, since 1970, the price of gas when adjusted for inflation has remained relatively stable, except for the brief period in the 1980s when it reached $2.30 in 1998 dollars. Besides, he pointed out, the price of gas in Denmark is now $3.60 a gallon.

A comparison

``Europeans pay a lot more for gasoline and always have,'' Schlichting said. ``We Americans have been very fortunate.''

Since most experts think the price will stabilize soon, it's not clear whether many motorists will be motivated to try alternative modes of transportation. But 45-year-old Sonny Hogg, of Petaluma, who builds and sells ticket vending machines, thinks people ought to consider it.

He was loading up his Mitsubishi Montero sport utility at the north First Street Chevron, but he wasn't worrying about the cost.

``I don't care,'' Hogg said, noting that the Montero was his company's car and he doesn't use a car of his own to get to his job. ``I ride a bike to work.''

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-- Martin Thompson (mthom1927@aol.com), March 02, 2000