Mena
High Prices at the Pump
3/11/08
Get a bite to eat for lunch or put gas in the 1998 Explorer, 6 cylinders, in order to get to school?
This is something Benny Guzman, 23, Anthropology had to contemplate upon realizing that he only had $7 to spend and gas prices increased 13.7 cents last week, according to the Los Angeles Times.
“I don’t have as much money at my disposal as I did before the gas prices increased,” Guzman said. “Most of my budget is going to the gas pump.”
The current elevated prices are attributed to many supply and demand factors. In particular, low gasoline refining capacity in the United States. In addition, there is an increasing world demand, especially in rapid growing countries like India and China.
“The high gas prices pose a significant challenge for the economy,” Tanja Carter, Economics professor, said. “It is difficult for commuters to reduce purchases of gasoline significantly in the short term. Of course, higher expenditures on gasoline means consumers have less money available to purchase other goods and services.”
Other reasons for the high gas prices include, ongoing geopolitical tensions, investors worried about inflation and the weak dollar.
“I am not going out as much as I use to,” Claudia Avitia, 28, Business said. “Especially if I have to come to campus twice in the same day.”
Avitia commutes from Lynwood to the EC campus five days a week. She drives a Toyota Highlander, 6 cylinders, and she’s spending approximately $120 a week at the pump.
“It’s a very difficult time because not everyone can afford to pump gas in their car everyday,” Avitia said. “I don’t have a choice because I have to pick up my children from school. Public transportation is not an alternative for me.”
Reports indicate that oil inventory levels have increased. Usually this would signal a potential decline in the price of gasoline. However, the weak dollar makes speculative investment in a dollar-denominated commodity such as oil, more attractive to foreign investors.
“I usually see some students pumping gas but when the prices increased, I haven’t seen as many,” Martha Barrintos, cashier at Thrifty gas station on the corner of Prarie Avenue and Redondo Beach Blvd. said. “When students do come, they only purchase about $1 or $2 in gas to get where they have to go. They are not filling up their tanks.”
Students are not the only one’s who have to pay more for gasoline. Gas stations, such as Thrifty’s also have to pay more when the prices are increased. According to the L.A. Times, crude oil costs are near $100 per barrel.
“High gas prices are necessary to reduce demand. If resource scarcity is the primary cause, high prices will reduce consumption, which will result in an increase in inventory,” Michael Brennan, Biology professor said. “High prices will also cut down on greenhouse gas emissions more effectively and more immediately than any government program short of fully enforced rationing.”
As California switches from a winter gasoline blend to a smog-reducing summer blend in May, upward pressure on prices could increase. Summer gasoline blends cost only slightly more to process, but sometimes refiners will draw down winter blend gasoline levels before supplying the summer blend, temporarily increasing prices.
“I use to drive to the San Fernando Valley every weekend but I’ve had to cut that down to twice a month,” Guzman said. “I have to ration the gas in my tank to what’s most important, getting an education.”