As if the Bay Area wasn't expensive enough, gas prices are soaring towards $5 a gallon.
If you thought all this gas nonsense was beginning to die down, forget it. It’s looking like The Bay might see gas prices soaring towards $5 a gallon by summer.
Current gas prices in the Golden State already top $4 a gallon in many places, enough to bring a tear to any motorist’s eye. As of Friday, the statewide average was $3.96, 25 cents higher than last month and a whopping 46 cents more than this time last year.
It doesn’t seem to make a difference either there has been a steady drop in fuel use since the recession hit in 2008. In a normal business situation, a drop in demand would mean lower prices, but not true in the fuel-pricing game.
Energy experts claim there are many problems causing the surge in gas prices including refinery issues in the US and overseas, along with escalating tension with Iran over its nuclear program.
And while the gas prices are definitely hurting our pocketbooks, it’s also hurting our fragile economy. According to ABC 7, a USC business school report estimates that for every penny increase in a gallon of gas, as much as a billion dollars is pulled from our economy. This means that another $1 increase in gas could sap $100 billion in other spending.
Terry Connelly, Dean Emeritus of Golden Gate University’s business school, told ABC 7 about the circular effect this creates:
“So what happens to the stocks of Wal-Mart, Target, and so forth. We’ve had a nice run-up in the stock market. Then you start seeing stock analysts start downgrading these stocks. They’re not going to be making as much money in this quarter because of higher gas prices. That affects people’s 401Ks, so you get a feedback loop.”
Although the barrel prices are increasing, it’s also important to note that a significant amount of what we pay for gas is taxes. It should come as no surprise that California has the highest average gas tax at more than 64 cents per gallon, followed closely by New York.
Here are some alternative options instead of driving your expensive gas-guzzling vehicle:
