January 11th, 2010 12:16 PM by Lehel S.
BALDWIN PARK - "Damn!"
That was Jose Rodriguez's reaction, as he filled up his truck at a Baldwin Park Mobil station and learned that gasoline may get as high as $4 a gallon this summer.
But that's where prices are headed in California, said Bob van der Valk a fuel-pricing analyst with 4Refuel Inc. in Lynnwood, Wash.
And it's coming, despite high unemployment and the fact that gas demand is down in the United States.
The average price of a gallon of self-serve gasoline in Los Angeles-Long Beach area hit $3.05 per gallon Friday, the 15th day in a row prices have risen. That's $1.17 more than a year ago, 12 cents more than a month ago, and 6 cents more than a week ago, according to the Automobile Club of Southern California.
But by summer, they may be like they were in June of 2008, when prices topped $4 a gallon.
"The dollar is weak, everybody wants to put money back into commodities ... and we're back to driving the market back up for crude," van der Valk said. "We're going to be paying above $4 by summer."
Crude and gasoline futures have climbed 15 percent since mid-December, and nationally prices at the pump this week are higher than at any time last year.
The news doesn't come at a good time. With more than 15 million people without jobs in the U.S., higher gas prices will affect those who need work the most, said economist John Husing, who specializes in the Inland Empire's economy.
"People at the lower end of the income system ... people at that level will be forced to make choices between paying for gas and buying other things," Husing said.
Even Rodriguez, a Baldwin Park resident who recently lost his job, said he was hesitant to drive anywhere for a few days, because of the price of gas.
Industry observers and economists agreed that investors - rather than consumers - are driving the price up.
Van der Valk pointed to major investment banks, such as Goldman Sachs, which are reacting to a weak dollar by putting money into commodities such as oil.
It's not U.S. demand that they are banking on.
It's global demand in burgeoning economies such as China and India.
"That almost guarantees we will see higher gas prices in this country," Husing said.
That and the seasonal costs to refineries of shifting to summer blends, van der Valk said.
In the short term, higher prices will hurt the economy and threaten an economic recovery, the beginnings of which have been taking shape, analysts said.
But in the long-term, higher prices could be a blessing in disguise, Husing said.
"There is a feeling among economists that if the U.S. was serious about weaning itself off of oil, the only way to do it is to raise the price of gas," Husing said.
It's about the national interest, Husing added.
"We buy (oil) from all these people who hate us," he said.