Gasoline Prices to Dealers Soar by 9.5 Cents

Gasoline dealers paid 9.5 cents more per gallon last week for regular unleaded gasoline after the Iraqi invasion of Kuwait, a survey of suppliers indicated Sunday.

The Lundberg Survey of wholesale prices, the amount gasoline dealers pay for their product, showed that nationwide average prices Friday rose to 76.5 cents a gallon among the most price-sensitive wholesalers.

The survey, taken weekly, covers 75% to 80% of U.S. suppliers of refined gasoline.

Figures gathered since Friday indicate a weekend of increases. Rough estimates showed that prices from the most price-sensitive suppliers have gone up another 6 cents, survey chief Trilby Lundberg said Sunday.

Crude oil bought at last week’s higher prices won’t be refined and flowing from U.S. gasoline pumps for about a month. But Lundberg and an oil company spokesman said increases in the spot market for gasoline translate into higher pump prices more quickly during the summer.

Many oil companies sell more gasoline than they refine during the summer months, so they have to supplement their supplies by buying on the volatile spot market, said John Lord, a spokesman for Mobil Oil Co. in New York.

“The refinery industry is cranking out every gallon of gasoline it can and still has to buy on the spot market. The impact on the gasoline distributing system is faster than ever,” Lundberg said.

Lord also said many are apparently anticipating higher costs from the Iraq-Kuwait conflict.

“When you know future costs are going to go up, if you can recover some of those costs today, you’re going to do it if the price will hold,” Lord said.

Other increases over the week for the same grade of gasoline were 4.73 cents to a level of 74.5 cents a gallon for middle-market distributors, and 2.55 cents to just over 78 cents a gallon for the most stable part of the market.

Since Friday, estimates show that prices in the middle market have risen 3.25 cents, and in the upper--or most stable--market 3.50 cents, Lundberg said.

The most price-sensitive are the independent wholesalers that have few, if any, long-term contracts with gasoline dealers and meet demand by getting supplies on the spot market.

The most stable are those who deliver branded gasoline to stations under a contract.