War Talk Boosts Prices of Fuel Despite Vows to Increase Production
War jitters sent prices of gasoline futures to record highs Monday and kept crude oil futures prices strong. Most oil companies increased wholesale gasoline prices to their dealers, and a new survey showed that prices at the pump starting going up again last week.
The national average retail price of self-serve unleaded gasoline, which had shown signs of softening, rose last week by 2.1 cents a gallon to $1.237, bringing the total increase since Iraq’s Aug. 2 invasion of Kuwait to 16.2 cents a gallon, according to a survey released Monday by the American Automobile Assn.
Meanwhile, several major oil companies hiked wholesale gasoline prices during the weekend or Monday, increasing the likelihood of more price run-ups at the gasoline pump and apparently ending a brief period of restraint requested by President Bush.
By Monday afternoon, only Atlantic Richfield Co. maintained a freeze on the wholesale price of gasoline, although it said it would raise its prices for diesel and jet fuel.
Oil companies blamed the increases mainly on the need to keep up with the competition, but the new round of hikes brought renewed complaints of profiteering from regulators and a consumer group.
On futures markets, the September contract for unleaded gasoline broke the dollar barrier, soaring 4.28 cents a gallon Monday to close at $1.0025, the highest price since gasoline futures began trading on the New York Mercantile Exchange in 1984.
The September contract for crude oil fell 7 cents to close at $28.56 a barrel, but the October contract jumped 31 cents to close at $28.59 a barrel.
Traders were apparently unaffected by weekend statements from Saudi Arabia and Venezuela that they would boost oil production to help make up for any shortfall from the worldwide embargo of Iraqi and Kuwaiti crude.
Such statements were overshadowed by increasing fears of war, traders said, heightened by a tough speech by Bush on Monday. Also, the Organization of Petroleum Exporting Countries voted not to hold an emergency meeting to consider increased production quotas.
Monday’s average retail price of $1.237 a gallon of gasoline remained below the post-invasion peak of $1.253 reached Aug. 9. But most of the recent increases on the retail side have occurred since last Friday, the association reported.
The higher prices drew the usual complaints. On Monday, attorneys general from 24 states met in Washington to discuss the increase in gas prices and to mull possible antitrust action against oil firms.
The companies “held back the prices for a while in response to pressure from the President and Sen. (Bob) Dole (R-Kan.), who was among senators threatening a windfall profits tax,” said Nicholas Fedoruk, environmental policy director of the consumer group Citizen Action. “But Congress is now in recess, and I think they’re trying to make a little more money.”
Oil company officials denied the charge, arguing that the price increases were intended to keep up with the skyrocketing spot market and to anticipate the replacement costs of new crude.
Although most company officials admitted having no problems with crude or gasoline supplies, they argued that prices had to remain as high as those of competitors to avoid runaway demand that might deplete gasoline inventories.
Arco, which has not raised its wholesale gasoline prices since freezing them Aug. 8, said its sale volume has gone up about 12% since then. An average of 100 Arco stations a day are running out of gasoline for as long as four hours at a time, compared to 2 1/2 hours last week, spokesman Douglas G. Elmets said.
While holding the line on gasoline, Arco hiked diesel prices Monday by an average of 6 cents a gallon. Today, Arco will boost prices for jet fuel 5 to 10 cents a gallon on average.
Several oil companies raised the prices they charge dealers:
* Exxon Corp. raised prices an average of 1.1 cent a gallon Monday, including a 1-cent-per-gallon increase for regular unleaded gasoline in Los Angeles.
* Mobil Corp. raised prices 0.5 cent to 1 cent a gallon in about one-third of its U.S. markets during the weekend, including an increase of 1 cent a gallon in Los Angeles.
* Texaco Inc. raised wholesale prices by 2 cents a gallon in Los Angeles on Saturday.
* Chevron Corp. raised prices by 1 cent per gallon in selected markets on Saturday.
Unocal Corp. said it had not raised prices in the past two days; Shell Oil Co. refused to comment.
Elsewhere, Amoco Corp. hiked prices 1 to 2 cents per gallon in several markets during the weekend; Phillips Petroleum Co. raised them 2.2 cents per gallon on Saturday and 4.74 cents per gallon nationally, effective today, and Sun Co. raised them 4 to 5 cents per gallon Friday on the East Coast.
