BRACING FOR AN OIL SHOCK : The Southland : Fearing Worst, Businesses Map Out Strategies

Southern Californians could see service disruption and higher prices in energy-dependent businesses ranging from asphalt suppliers to taxi firms, as companies activate contingency plans to help them weather possible fuel shortages caused by the conflict in Kuwait.

As President Bush banned Iraqi oil imports, Southland firms tried to assess the possible ramifications. Some decided to wait and see, but many fuel-hungry companies thought about how to stave off disaster.

When word of the Iraqi invasion of Kuwait trickled out Wednesday, Laura Nelson-Flaxman, owner of Metropolitan Express, sat down with her company’s general manager and hatched a plan that will help ease costs for the airport-shuttle and van-pool firm but could hurt customer service.

Metropolitan Express picks up only two customers on each airport trip. Nelson-Flaxman is considering increasing that to three or four, which will make each trip longer.

“We’re going to have to inconvenience the public a little more than before,” Nelson-Flaxman said. “It looks like the quality of our service will be affected. We may have to raise rates, which we don’t want to do.”

Glenn Howell of Command Express, a freight broker based in Santa Ana, said his company has raised shipping rates for a fully loaded truck by five cents per mile since Thursday. The going rate is now about $1 a mile, and he anticipates further increases as a result of rising fuel costs.

“It might cause people to consolidate their loads a little more,” Howell said. But he also fears that if fuel costs recede, the new charges, which are passed through to customers, will remain.

Many companies learned hard lessons from the oil embargoes of 1973 and 1979 and said Friday that they plan to reactivate contingency plans from that difficult decade.

Durham Transportation Inc., a 40-year-old Rosemead bus company, said it never ran out of gas to take children to school during those crises. But it did lose some money when gasoline prices skyrocketed, because the company’s contracts with school districts were written with a fixed fuel price.

“It was because of the ‘70s that we put fuel clauses in our contracts,” said John Edney, Durham’s senior vice president. “If fuel goes up or down, there’s an adjustment to our prices.”

The Checker Cab company that serves Burbank, Glendale and Pasadena was a big money loser in the 1970s. When gasoline rose to $1.50 per gallon, cab fare was a mere $1.40 per mile, said C.E. “Socks” Cadden, fleet supervisor.

To keep customers, the company waited more than six months before going to the region’s city councils to plead for a rate hike, which it eventually got, Cadden said. “We would consider doing the same thing again,” Cadden said. “But before we would increase, (gas prices) would have to go way up and stay for a long time.”

But Huntway Partners, a Valencia-based refiner of oil into liquid asphalt and other products, plans an immediate price hike, company officials said Friday. Huntway President Juan Y. Forster said that even before oil prices surged again Friday, the price the company pays for crude had jumped $4 to $6 a barrel since early July.

The company doesn’t plan to change production but will immediately try to raise prices for its products to offset the higher crude prices, he said.

C. O. Thompson Petroleum, an Orange-based company that distributes gasoline and diesel fuel to corporate fleets and independent service stations, is facing considerable uncertainty because of the troubles in Kuwait.

“Right now, we’re scrambling,” said Tom Sisneros, a sales representative. “We can’t let our customers know what prices are going to be tomorrow.”

Thompson can do little to insulate itself from the problems, Sisneros said, primarily because fuel is so expensive to store. But it has raised prices about 10%.

Several of the refiners that Thompson buys oil from have notified the company that they will begin allocating fuel, limiting the quantity any customer can buy. The initial allocations, Sisneros added, are high enough to prevent disruptions, but smaller or newer distributors who don’t have a long relationship with refiners could be hurt.

Some firms are considering plans even more drastic than raising prices--closing up shop for good, for example. Rose Pullaro, president of A.R.O. Trucking in El Cajon, said her company has been pushed to the edge of failure by high fuel costs and a slump in construction. A significant fuel-price increase could drive her out of business, she said.

“I don’t know what I’m going to do,” said Pullaro, whose company is a small operation with only three trucks that moves heavy equipment for construction firms. “I may have to close the doors. I don’t want to. It’s my life, but it’s one thing after another.”

Staff writers John Medearis, Dan Parks, James Peltz and Jonathan Weber contributed to this report.