Flow of Oil to State Rises; So Do Gas Prices
The flow of Alaskan oil to California quickened Monday when the Coast Guard lifted some restrictions on tanker traffic, but the erratic spurt in gasoline prices on the West Coast showed no sign of abating.
The prices charged by refiners for unleaded gasoline jumped anywhere from 2 cents to 15 cents a gallon in Los Angeles early in the day, and further price increases were to take effect at midnight.
Up 27 at Pump
The price hikes were being passed on to consumers to widely varying degrees--in some cases, the increases have been as much as 27 cents a gallon at the pump since the March 24 oil spill.
An early sign of a backlash against the retail price run-up in the wake of the spill in Alaska’s Prince William Sound came in a lawsuit by an Orange County group demanding that Exxon Corp., whose tanker released the massive spill, repay motorists for the higher consumer costs.
“I can’t afford to put gas in my car anymore--just because of some sailor who’d been out drinking,” said Katherine D. White, a Newport Beach legal secretary who is a plaintiff in the class-action suit. “Exxon should have to pay for this. Then maybe, next time, they’ll be a little more careful.”
The suit reflects another dimension to the public relations beating the oil industry is taking as a result of the spill as consumers feel they are paying at the pump for Exxon’s negligence.
Exxon had no comment on the suit, but Arco spokesman Albert Greenstein said, “There’s no question there are people who think we are trying to take advantage of a situation. But we’re not gouging customers, we’re passing on real costs.”
Despite the continued price run-up, the resumption of a full schedule of oil shipments from the port of Valdez was cited by Energy Department officials as evidence that the tight supplies and sharp price increases on the West Coast are temporary and that the situation is likely to ease in a matter of days.
The tanker news took some of the pressure off crude oil prices on the New York Mercantile Exchange, where the price for future shipments of a benchmark U.S. crude oil fell by 24 cents after a series of steep climbs last week.
Still, the price of unleaded gasoline for immediate delivery continued its climb, rising an additional 0.88 of a cent to 67.85 cents a gallon, the highest level in more than three years.
But late Monday, operators of the trans-Alaska pipeline said that they had been notified at midday that some restrictions were being reimposed by the Coast Guard--at the request of Alaska Gov. Steve Cowper--limiting the tankers once again to daylight operation.
But Alyeska Pipeline Co. said it hoped that three or four tankers could move out of Valdez each day, versus the one a day allowed since Tuesday, despite the reimposed restrictions.
Atlantic Richfield, the biggest producer in Alaska and the leading gasoline retailer in California, voiced concern that shipping lanes would be closed altogether for at least a day when the crippled tanker, the Exxon Valdez, is refloated later this week.
The normal 2-million-barrel-a-day flow of Alaskan crude was stopped altogether for four days after the oil spill, then was resumed at a rate of 800,000 barrels a day. Flow through the pipeline was raised Monday to 1.4 million barrels a day.
California normally gets 40% of its oil from Alaska; regions on the West Coast that lack domestic oil production get 50% or more of their crude from Alaska.
Arco and the other main shippers of oil from Alaska’s North Slope, Exxon and BP America, have all cut back refinery operations to varying degrees in the Puget Sound and San Francisco Bay area while delaying or cutting deliveries to their crude oil customers.
That, in turn, has touched off a scramble by refining companies for crude oil from other sources in anticipation of having trouble finding oil, and some refiners and middlemen were apparently paying a premium for such oil or exacting a premium price from their own anxious customers.
By Monday, the “rack,” or wholesale, prices charged by 16 Southern California refiners had jumped an average of 20 cents a gallon to an average of 90 cents for regular unleaded gasoline since the March 24 incident, according to PetroScan, an information service.
The increases over the last six days range from 4 cents a gallon at the Chevron refinery in El Segundo to nearly 33 cents a gallon by Powerine, an independent refiner in Santa Fe Springs, according to PetroScan.
Those wholesale prices, which don’t include the nearly 19 cents in state and federal taxes on gasoline or transportation charges to service stations, would typically be at least 25 cents below the retail price ultimately paid by motorists.
However, price increases are affected by marketing strategies of the bigger oil companies and by the prices charged by stations down the street, dealers say.
Carroll Hansen, a Shell Oil Co. dealer in an affluent Westside area, said Monday that his wholesale price climbed an additional 1.6 cents a gallon Monday but that a Shell dealer in another Shell “price zone” was charged an extra 4.6 cents a gallon.
It was not uncommon Monday to see retail price differentials of 10 to 12 cents a gallon from one brand to the next within a few blocks of each other, depending on which refiner those dealers bought their gasoline from.
Meanwhile, there were rumors that refiners were holding gasoline off the market because stocks were running low and they wanted to satisfy the needs of regular customers--leaving distributors and dealers without long-term supply arrangements in dire straits.