Zigzagging Gasoline Prices

Down In Midwest, Up In West; Drivers Cutting Back UPS Adds Surcharge; Farmer Costs Could Rise 40%

SAN FRANCISCO, July 20, 2000 AP Prices are now going up and down, depending on where you are. (CBS) Gasoline prices. First they went up, then they came down some. Now there are signs they are doing both at the same time. And CBS News Correspondent John Blackstone says it appears the roller coaster ride is not over yet.

In the Midwest prices have taken a steep drop, and they've been coming down in most of the rest of the country. But in California the cost of stopping at the pump is on the way up again.

The national average price of gasoline is currently $1.55 a gallon. That's still 32% higher than it was one year ago. And in the west, prices have risen nine cents in the past month to an average of $1.72 a gallon.

United Parcel Service is one big gasoline-dependent company that said Thursday it simply can't absorb the higher cost of doing business any longer. It announced a fuel surcharge on some package deliveries.

Farmers are facing cost increases of up to 40 percent because of rising fuel prices-- enough to wipe out about half of the emergency aid congress sent to them earlier this year.

In San Francisco, where two dollars a gallon is now common, consumers may be finding a way to fight back. The higher cost is causing some motorists to cut back on their driving. The result: For the first time in five years, gasoline consumption has dropped.

It's basic common sense, according to energy analyst John Kilduff. "Certainly Economics 101 appears to have worked, with people responding to higher gasoline prices by cutting back on their driving."

The decrease in gas consumption so far this year is slightly less than one percent, but it follows steady increases of two to three percent in recent years, as the economy has grown and Americans have embraced sport utility vehicles and their hungry gas tanks.

"It's 30 to 40 dollars a week of discretionary income now that is down, down the gas tank if you will," says Kilduff.

Now a few consumers are finding other ways to battle the oil companies. As a local politician in San Francisco, Gavin Newsom railed against high gas prices. Then he bought an electric car.

Newsom says he is sending a message to the oil companies. "Yeah, forget it, tough luck. You know I'm sick of the rhetoric, the excuses, the supply-and-demand models and world supply of oil and I'm sick of paying upwards of two dollars a gallon."

Unusual vehicles like Newsom's should soon be more common on California's highways. State law requires automakers to produce up to 200,000 low emission vehicles for sale in California by 2003.

But with some 200 million gas-burning vehicles still on the road in this country, it appears gas prices will keep driving Americans crazy for years to come.

Copyright 2000,

http://cbsnews.cbs.com/now/story/0,1597,217336-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), July 20, 2000