The price of gasoline in Los Angeles has spurted as much as 10 cents a gallon in the five days since an oil spill interrupted the flow of crude oil from Alaska, and dealers and oil company officials warn that prices will continue to rise.
“You will not see a price anywhere under $1 a gallon in another 10 days,” predicted Ron Appel, head of United Oil Co., which owns 26 independent and Arco stations in the Los Angeles area.
The increases so far are uneven, and officials at Atlantic Richfield downplayed the effects of the tanker incident. Prices had been climbing along with the price of crude oil for several weeks, and Arco said its West Coast refineries continue to produce gasoline at normal levels.
Combination of Factors
“It’s a combination of rising crude prices and increased demand,” a spokesman said. “We’re not hanging anything on Alaska at this point.”
But a Chevron executive pointed to a 12-cent-per-gallon increase in gasoline spot prices in Los Angeles since Friday and said the oil production lost since the tanker spill off the port of Valdez will significantly tighten the region’s gasoline markets.
California gets 40% of its oil from Alaska. All shipping from Valdez was halted until Wednesday, which meant that the flow through the trans-Alaska pipeline was cut to 40% of the normal 2 million barrels per day. Production from the fields was reduced accordingly, and tanker traffic has only resumed at a snail’s pace.
“By this weekend, the industry will have lost 10 million barrels of production of Alaska North Slope crude,” said Lew Blackwell Jr., western general manager for supply and distribution at Chevron USA in San Francisco.
“This will have to be replaced with gasoline shipped from the Gulf Coast or overseas, and in the meantime most suppliers will be short of gasoline. Obviously there is no shortage now, but they are projecting out two or three weeks and seeing that their replacement oil is going to be more expensive.”
Appel said his wholesale price per gallon has surged to 80.5 cents from 70.5 cents since Friday for regular unleaded. He said that as recently as Feb. 1, the so-called “rack” price, which doesn’t include taxes, was 51.5 cents a gallon.
He said Arco prices have jumped nearly a nickel a gallon in the last two days, accelerating a pace that has driven his Arco pump price to 93 cents a gallon for regular unleaded. Prices at his independent stations have gone from 87 cents to 97 cents since Friday, “and 97 is not enough. We’re going to have to go up again tomorrow,” he said Wednesday.
Price increases have been more moderate elsewhere, but Shell dealer Jerry Kaplan in Sherman Oaks said his wholesale price has jumped 6 cents a gallon for regular unleaded since Friday. Shell doesn’t rely directly on Alaskan oil, and supplies don’t appear to be tight, he said.
“I guess everybody’s just jumping on the bandwagon,” said Kaplan. “I see no rhyme or reason to it.”