Gas prices continue upward spiral around Tahoe

Gasoline costing more than $2 a gallon?

That's the case at some gas stations in South Lake Tahoe this week.

With the price of crude oil costs at near record highs and refineries keeping their inventories low, industry experts say prices may continue to go up.

According to California Energy Commission, the past week the price of gasoline in the state rose around 3 cents, which meant the average cost of a gallon of gas was $1.70.

"There's a foundation of a lack of confidence in the California refining systems to meet demand," said Jay McKeema, executive vice president of California Independent Oil Marketers Association. "People are thinking 'I better buy today.' And that creates an artificial demand in the system."

California's demand for a higher quality fuel forced refineries to upgrade their equipment, kicking many independently owned refineries out of the market. McKeema said 80 percent of gasoline sold in the state comes from franchise or "brand name" companies.

As far as where refineries in California get their oil, nearly one-third of it comes from Alaska where this past week a barrel of crude cost more than $31. That is slightly cheaper than the record high of $32.80 a barrel that Alaska hit in on June 31of this year.

Besides costly crude, Peter Krueger, state executive from Nevada Petroleum Marketers, said there is a lot of uncertainty in the market right now.

"Gasoline is a commodity, a product that's traded," he said."Traders and speculators are affecting the cost of gasoline that you and I pay on the street."

The coming Labor Day weekend and the fact that gasoline on the California side of South Shore must be MTBE free may also be factors contributing to the high prices at the pump, Krueger said.

"I don't know what's causing them to go up," said Al Moss, owner of two Chevron stations at South Shore. "Crude oil prices are going up, reserves are at a 25-year-low and the oil companies are taking a profit position. I think there's some greed going on if you want to know the truth."

James Hickey, owner of the Union 76 station at Stateline since 1996, and owner of several gas stations in San Diego, said when gas prices go up he loses money.

"Since I've been there in 1996, I think it's the highest it's ever been," he said. "It's actually worse for us when prices are higher. My credit card fees go up from $3,000 to $4,000 a month. I lose about $1,000 a month just because of the gas prices - and we have to accept credit cards."

At the pump Wednesday afternoon, a San Jose, Calif., man vacationing at Tahoe paid $39.44, $2.04 a gallon, to fill up his Dodge Durango.

"These prices aren't really much of a shock, that's what I paid in San Jose the other day," said James Blum, 45. "I think the company is just price gouging. It's called creating a shortage. When you look at the overall picture it's a farce."

McKeema said many investors and others involved in the industry are waiting to see if countries in the Middle East will step up production.

"All crude oil prices are hinged on the cost of oil from the Middle East," McKeema said. "All these prices float together."

Johnny Neri, a 36-year-old from South Lake Tahoe, seemed ambivalent about paying $1.97 a gallon. "If you're gonna drive you have to pay the price," he said. "Maybe it'll encourage people to take the bus."