Lots of factors make gas prices a big pain in SLO County

Gas prices are finally on the decline in much of the country, which is good news for drivers. That is, unless you drive in San Luis Obispo County and need to fill up your tank.

If you fueled up Monday, for example, you could expect to pay an average of $3.97 per gallon of gas locally, compared with $3.89 statewide, according to a survey by the AAA and Oil Price Information Service.

The local price beats San Francisco’s $3.952, making San Luis Obispo County’s average gas price the highest in California again this week. San Francisco typically has California’s highest prices, even as other Bay Area averages are lower.

A year ago, the local average price for a gallon of regular gas was $3.035.

Diesel is also more expensive here. A gallon of diesel was $4.25 on Monday, compared with $4.18 statewide, according to the Oil Price Information Service data in the AAA Fuel Gauge Report.

Currently, the national average for regular unleaded gasoline is $3.51 per gallon, down from a high of $3.98 in early May, according to the AAA. Last week’s plunge in oil prices could push the average to $3.25 per gallon by November, analysts say.

“California is always high compared to the rest of the country,” said Rob Schlichting, spokesman for the California Energy Commission. “We’re a market unto ourselves. There are no pipelines that bring gas across the Rockies. We make it here or have to ship it here and that can be expensive.”

About a dozen blends of gasoline must be made for California to meet air-quality requirements. This also increases the per-gallon cost.

Declining demand and competition among stations can help keep prices down, but not much else can, especially when oil prices are high.

“Fuel is an unregulated commodity, prices are set at whatever the market can bear,” Schlichting said.

Geography and limited competition among filling stations is also partially to blame for the high price of fuel in San Luis Obispo County.

Ken Dewar, president of JB Dewar, a fuel wholesaler in San Luis Obispo that sells diesel and gasoline to large commercial customers, said there are several factors that drive prices up at local pumps.

“Prices vary by zone,” Dewar explained. The zones are based on distribution patterns for suppliers.

Most of the fuel that ends up at local stations comes from refineries, terminals or loading docks in Los Angeles, the Bay Area, Fresno or Bakersfield, adding between 8 and 12 cents per gallon for the cost of transportation.

The expensive price that comes attached to Central Coast real estate also adds to the high cost of fuel here. Operators must pay higher rental and leasing rates. That extra cost is passed on to customers.

San Luis Obispo is also a tourist destination, and that helps keep prices above average.

“The market allows it here,” Dewar said. “We don’t have large amounts of competition and operators can charge whatever the market will allow.”

There is hope that prices could drop Oct. 31, when stations will make the switch from the more expensive, environmentally friendlier summer-grade gasoline to the less expensive winter-grade gas.

But experts offer this warning: There could be record high prices in the months ahead.

“There is a lot of uncertainty in the fuel industry,” Dewar said. “Prices used to change once a week. Now they change at least once a day.

“And they fall more slowly than they go up,” he added. “I don’t think I ever thought we’d see gas over $4 a gallon but, I also never thought we’d see prices influenced by anything other than supply and demand.

“It’s a different market than it was 10 years ago,” Dewar said. There seems to be a correlation between the value of the dollar and the cost of fuel per gallon.

“When the dollar goes down, those who control the crude oil market raise the price,” Dewar observed.

Though gas prices have dipped nationwide, they are still historically high.

Gasoline has averaged $3.56 this year. That’s the highest yearly average ever, according to AAA and Oil Price Information Service data.

And although motorists have cut back driving in the face of high prices, they are likely to spend more this year on gasoline than ever before — close to $490 billion, according to Tom Kloza, chief oil analyst at Oil Price Information Service.