LABJ FORUM – Natural Gas?

Gasoline prices in California are on the rise again, eclipsing $2 per gallon last week. While some of the rise is being attributed to higher oil prices and OPEC’s increasingly hardball position on production limits this is not the time of year normally associated with jacked-up pump prices. That would usually come in a few months, when the semi-annual winter/summer blend switch takes effect. So the Business Journal asks:

Is the recent rise in gas prices as result of market forces or manipulation by the industry?

Yesceni Ramirez

Vice President, Business and Government Affairs

Wescom Credit Union

I think it’s the market. We have a high demand for gas because we drive everywhere. In January and February we have a lower demand than the rest of the year. Like many other families, we take our vacations in July and August, and demand for gas just escalates. I understand California gas producers also have to use a special formula to meet the higher standards here, and it’s more expensive to produce.

George M. Eshaghian

Executive Vice President, General Counsel

WMC Mortgage Corp.

There’s a lot of psychology in how gas prices go up and down. We have a lot of refineries in California, we have some of the best and largest markets, we should have some of the lowest gas prices in the country. But we’re one of the most expensive in the country. It has a lot to do with market psychology, but I wouldn’t say that it’s rigged.

Mike Lambert

Principal

Bradley-Lambert Inc.

I’ve seen this happen over and over again. If it wasn’t fixed, the gas companies would be able to predict it by now. For example, the gas prices go up around the Fourth of July and go down around the end of the summer. From what I see in the newspapers, the oil executives say, “Oh my gosh, prices have gone up,” and they give all these reasons, but they can’t give the same reasons that many years in a row and have it be credible. I think it’s manipulated.

Benjamin Trust

General Manager

Megatrax Music

I think the pump prices are just due to increases in travel and the market’s demands. It’s just the old supply-and-demand issue. If I sold a product and my product increased in demand I would charge more, too.

Susan Schult

Senior Underwriter

Heritage General Agency

I suspect it’s all rigged. The weather’s nicer, I think people are traveling more. People don’t seem quite so worried about terrorism as they were over the holidays. The oil companies are trying to hike prices and get us ready for the summer.

Brian Sagheb

President

Ultragrow Enterprises Inc.

It’s got to be manipulated, only because oil prices have been high for some time, and during that time, prices went down. It otherwise doesn’t make any sense. It seems extremely volatile when world market oil prices go up, but it doesn’t seem to be a reflection this time, prices have been steadily high. For months now we’ve been fortunate enough to have good prices.