Gas prices increase, may affect businesses

By Amanda Baumfeld | August 12, 2009
San Gabriel Tribune

As gasoline prices move higher, a new study details how the state's gas prices could have disastrous effects on businesses, officials said.

The average price of a gallon of regular gas on Wednesday was $3.05 in the Los Angeles and Long Beach areas, according to figures from the Automobile Club of Southern California.

That was an increase of about a dime from last week, said Marie Montgomery, an Auto Club spokeswoman.

"Its gone up by double digits. That's always discouraging," Montgomery said. "We've been at a pretty hefty increase for almost two weeks."
Montgomery attributed the increase to low demand and the value of the dollar.

"Seems to be a very similar situation to what we had in the spring when prices went up with a fairly low demand and a fairly good supply," Montgomery said. "A lot of investment goes to the commodities market, such as gold and oil. It's a combination of thinking that the value of these are undervalued and also that our dollar is very weak."

Gas price trends show an August increase is typical, Montgomery added.

Some drivers filling up at an Arco station in West Covina on Wednesday did not appear too concerned about the increase.

"Three dollars is still relatively fair compared to last year," said Gustavo Gomez, 22, of West Covina. "People have to get around. They will pay the price regardless."

Environmental regulations are part of what's keeping prices higher, according to a study released Wednesday by Fueling California, a consumer alliance.

The study showed that Californians pay about 28 percent more in gas taxes than people living in other states.

Part of the reason for this is environmental regulations put in place to limit air pollution.

The limited availability of fuel also causes gas prices to fluctuate, according to the study.

California gets its fuel from local refineries, unlike states that use a pipeway system, according to Robert Sturtz, chairman of the Fueling California board.

"The only (additional) sources of supply are almost two weeks away by ship, and if a refinery has a problem with a delivery, the fuel prices spike up very dramatically," Sturtz said. "The supply chain is so long, and the alternatives are so few."

With the study, the alliance is aiming to raise public awareness and eventually change or create new policies.

If the same fuel system stays in place, Sturtz predicted it could be catastrophic for the state's economy.

"You have to remember everything manufactured or produced in California is affected by these prices," Sturtz said. "Some businesses will look at it, and if it is too expensive to do business in California, they will pick up and move to another state."