Gasoline Prices Continue to Skyrocket : Energy: Several oil companies abandon their freezes on wholesale rates. Increases at the pump are expected.
Rising Middle East tension drove up oil and wholesale gasoline prices on spot and futures markets Friday, and oil companies indicated that further hikes are on the horizon at the corner gas station.
Unocal Corp. and Amoco Corp. lifted price freezes Thursday, and Unocal, Chevron Corp. and Phillips Petroleum Co. raised wholesale gasoline prices Friday and early today.
Atlantic Richfield Co., which Thursday reported spot shortages of gasoline at 270 of its service stations due to strong demand, seemed to be the only major marketer still freezing wholesale prices Friday.
But its resolve appeared to be wavering. “We’re looking at it day to day,” said George H. Babikian, president of Arco Products Co., the corporation’s refining and marketing subsidiary.
“We’re substantially below the market at some of our stations with the price frozen,” he said. “We’ve hired every delivery truck we can find outside our own fleet . . . but we’re still having some run-outs at some of our service stations, and that’s the problem we face.”
On Friday, crude oil for September delivery soared by $1.27 to close at $28.63 a barrel in New York Mercantile Exchange trading. Unleaded gasoline futures gushed 8.5 cents from Thursday’s record to close at 95.97 cents a gallon .
On spot markets, unleaded gasoline rose as much as 8 cents in the Los Angeles area and was trading around $1.05 per gallon, industry executives said.
“It’s up, up, up, up, up,” said Michael Doyle, a market analyst with Computer Petroleum Corp. in St. Paul, Minn. “I think an awful lot of traders want to be long for the weekend because they feel war is going to break out.”
As for retailers, he said, “There’s an awful lot of pressure built in for retail to go up more.”
Nationally, retail gasoline prices had fallen by Wednesday, due to price freezes and wholesale cuts that were, in part, a response to President Bush’s call for moderation by the oil industry. On Wednesday, the average national price for self-serve unleaded gasoline was $1.218 per gallon, down from a peak of $1.253 per gallon Aug. 9, according to Computer Petroleum Corp. and the American Automobile Assn.
Despite talk of price hikes, however, most major oil companies selling gasoline in Southern California reported no problems with availability of supply.
Besides Arco, only Texaco Inc. said it expected “spot problems here and there”--due to a refinery problem earlier this month, according to spokesman David Johnson in Universal City. “Hopefully, they won’t be severe,” he added.
Other major marketers here are Chevron, Shell Oil Co., Unocal, Exxon Corp. and Mobil Corp.
The situation is worse for independent gasoline dealers and “jobbers,” gasoline wholesalers who sell fuel to fleets and service stations.
“It’s devastating, really,” said Ron Appel, president of United Oil Co., which operates 36 gas stations. He said independent marketers are paying as much as 96 cents a gallon for wholesale gasoline, not including taxes, compared to the prices in the high 80-cent range that oil company dealers are paying.
Moreover, he said, many independent retailers are finding it nearly impossible to find adequate supplies of fuel, particularly diesel.
Despite increased production, gasoline inventories have been steadily declining, nationally and on the West Coast, since the Iraqi invasion of Kuwait on Aug. 2--because of strengthening demand.
Nationally, refiners produced 7.465 million barrels of gasoline a day during the week ended Aug. 10, up 126,000 barrels from the week before and 375,000 barrels from the same week a year ago, according to the American Petroleum Institute. On the West Coast, production was 1.33 million barrels a day, up 102,000 barrels a day over the previous week and 117,000 barrels a day over a year ago.
By Aug. 10, national gasoline stocks had fallen 6.06 million barrels from the week before to 212.43 million barrels. That was 10.51 million barrels fewer than a year ago. On the West Coast, inventories had fallen by 501,000 barrels to 27.38 million barrels. That was 4.38 million barrels fewer than a year ago.
“The West Coast refinery situation is on the low side of normal because of refinery problems (industrywide),” Babikian said.
Arco normally refines 235,000 barrels of crude per day at the Carson refinery but, as because of a fire in a coker unit, that fell to 180,000 barrels a day early this week, Babikian said. About half the production is gasoline. The refinery was nearly back to capacity Friday and is expected to be completely on line early next week.
Texaco similarly lost refining capacity of 15,000 to 20,000 barrels of crude per day at its Wilmington refinery between July 26 and Aug. 12, because a unit was out of service with electrical problems. The refinery is back to full production, but “we’re playing catch-up,” Johnson said.
The major gasoline sellers on the West Coast reported the following price changes Friday:
* Arco, the region’s No. 1 retailer, said it is maintaining its price freeze indefinitely but is reviewing it daily. The average wholesale price that Arco charges its dealers for unleaded regular gasoline was 77.3 cents per gallon, 4 cents higher than before the invasion.
* Chevron, the No. 2 marketer, raised its wholesale dealer prices by a penny a gallon in the San Francisco Bay Area. On Wednesday, it had raised prices 2 cents a gallon in Los Angeles and San Diego. Chevron’s dealer wholesale prices range from the high 70s to the high 80s per gallon, an increase since the invasion of 5 to 8 cents a gallon on the West Coast, a spokeswoman said.
* Unocal raised prices Friday and early today by 1 cent a gallon in Los Angeles and some other areas of California, as well as parts of Oregon, Washington, Arizona and Nevada. It hiked them 2 cents a gallon in San Diego and Las Vegas. The company would not divulge its wholesale prices.
* Mobil, Exxon and Texaco did not announce price hikes Friday; Shell would not discuss the matter. In Los Angeles on Thursday, Exxon was charging its dealers an average of 82.6 cents a gallon for unleaded regular gasoline, an increase of 7 cents a gallon since the invasion. Friday, Texaco was charging its West Coast dealers an average of 88.8 cents a gallon, a 7-cent hike. Mobil said it has hiked wholesale prices an average of 6 cents a gallon since Aug. 2 to 82.4 cents a gallon.
