The student media organization of California State University Northridge

Daily Sundial

The student media organization of California State University Northridge

Daily Sundial

The student media organization of California State University Northridge

Daily Sundial

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Pundits explain why gas prices soar

A Pan-African studies major said she had to cut back on going to the movies and other social events to save money.???

“When I want to go around town, my boyfriend either drives me or I’ll walk or ride my scooter,” said Krystal Sims, who lives in the campus dorms. “I ride my scooter to school every other day now.”

American drivers are changing their lifestyles to compensate for high prices at the gas pump while economists and investment analysts debate the causes of rising oil prices.?

“I had to pay $4.25 this morning and almost had a heart attack,” Sims said.

The price of oil has more than doubled in the past year. Though the cost recently fell from its May 22 high of $135 to $122 per barrel, it will be a while before people see the change at the gas pump.?Consumers are still paying $30 or more to fill up a seven-gallon tank.?

California,?where a gallon of regular gasoline costs an average of $4.36, is?the most expensive state in which to buy gas, The?American Automobile Association indicates.?The second most expensive state is Alaska, where a gallon of gas costs $4.28.?

Economists are debating the cause for the increase.?Some pundits argue not enough oil is readily available to meet the demand of consumers. The U.S. Energy Information Administration indicates?the national demand for gas has averaged 9.3 million barrels per day in the last four weeks.

“There are many factors, but the real story is about plain old supply and demand,” said Robert Krol, professor of economics at CSUN.?”The demand is simply growing faster than supply,?and we don’t have enough refineries to produce what we need.”?

Several investment analysts attribute the increase in gas prices to investor speculation.?Speculation is an investment practice that allows investors to buy future stocks, betting that the price will increase.?They hold commodities, many of which consist of wheat, corn and oil, until the maturity date when they hope to sell it back at a higher price.?

“When investors hold these stocks, they decrease supply,” said Andrea Manea, senior analyst at AIG SunAmerica Retirement Services.?”We haven’t built refineries in 30 years.? The price of oil has doubled in recent years when we’ve seen more speculation.”?

A recent government supply report shows that the demand for gas for the week ending May 30 was down by 1.4 percent from the same period last year.? This indicates that high prices at the pump are changing driver’s behavior.?

Shirley Svorney, chair for the Department of Economics at CSUN, said speculators are a good indication of how we should change our behavior, and the consumer should look at them as providing valuable information.

“Speculation is not a bad thing,” Svorney said.?”If they are betting that the price of oil will go up, that’s a signal of what can happen in the future.? That might tell consumers to buy smaller cars and hybrids or move closer to work.”

Gas prices were regulated in the 1970s until former President Reagan deregulated it in the 1980s.?Krol said this means nothing can stop gas stations from charging whatever price they set.??

“But how much would they really sell?” Krol said.?”Gas stations near the freeways tend to be more expensive, but there are cheaper alternatives in other areas.” ?

Michael LaMarr, a CSUN student majoring in human factors, said he usually ends up with an empty tank near a freeway. LaMarr?commutes from Santa Clarita, where he pays $4.30 for a gallon of gas.

“I pay about $10 to $15 dollars more than I used to,” LaMarr said.

“The recent decline in oil prices may continue, but prices at the pump may not decrease until the end of the summer,” Manea said.?”We should start seeing it closer to $4 in a couple of months.”??

In the meantime, drivers are forced to limit their consumption and alter their lifestyles.??

“I’m eating out less now,” LaMarr said.??”I’m packing my lunches from now on.”?

To check gas prices in the Northridge area, go to

Gas prices around campus range from $4.10 at the Unocal station located at 8658 Balboa Blvd. to $4.23 at the ARCO located on Nordhoff and near the 405 freeway.??

Other alternatives in the Northridge area can be found at?

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