Retail Gasoline Prices Soar, but Futures Dive : Petroleum: Prices at Western pumps were highest, at $1.359 a gallon. A consumer group says simple greed is the culprit.
Profit taking drove crude oil and gasoline futures prices down sharply Friday, but a new survey showed that prices at the corner gasoline station have jumped to their highest levels since Independence Day, 1982.
By Friday, pump prices had risen to an average of $1.274 a gallon nationally for self-serve unleaded regular gasoline, a sharp 3.7-cent increase over Monday’s figure and up 19.9 cents since Aug. 1, the day before the Iraqi invasion of Kuwait, according to a survey by the American Automobile Assn.
Prices were highest in the West, where they averaged $1.359 a gallon, and lowest in the Mid-Atlantic states, where they averaged $1.236, according to the survey of about 5,000 stations. California averaged $1.316 a gallon, a 17.7-cent increase since July 4, the last time the association surveyed California prices.
Oil industry officials said the sharp increases reflect companies’ attempts to avoid runaway demand by middlemen and motorists, the increasingly high replacement cost of crude oil and the high price of gasoline on spot markets.
But a consumer group repeated charges that the price increases reflect simple greed by oil companies eager to reap windfall profits from the current Middle East crisis--charges that industry officials denied.
On the New York Mercantile Exchange, meanwhile, crude oil and gasoline futures prices were way off after reaching record highs a day earlier, as traders took profits before the weekend amid continuing uncertainty about political and military events in the Middle East.
“It was a bit of a strange day,” said Kevin M. Kelly, manager of futures trading for Chevron Corp.’s international oil company in San Francisco. “The mood of the day was simply profit taking in the absence of any substantial news in a market that was already quite long.”
The October contract for West Texas Intermediate, the U.S. benchmark grade of crude oil, closed at $30.91 a barrel, a drop of $1.02. Unleaded gasoline for September delivery closed at $1.0466, down 3.89 cents from its record level Thursday.
On Thursday, oil prices finished at their highest levels since 1983. At one point Thursday, the October contract traded at $32.35 a barrel, equal to the all-time high reached Aug. 2, 1983. In the last week, gasoline futures have been closing at their highest levels since trading began in 1984.
Trading throughout the day was volatile. Prices went down immediately after the opening but rose at various points on word of refinery problems at Lyondell Petrochemical Co.’s Houston refinery and a false rumor that President Bush had suffered a stroke, traders said.
Prices were ultimately driven down partly in response to the drop on London markets, where traders cashed out their positions in anticipation of a British three-day holiday weekend. Some fears may have eased on news that Iraq had pulled back elite troops from the border with Saudi Arabia.
Prices also fell on prospects for a meeting Sunday by some members of the Organization of Petroleum Exporting Countries to discuss boosting production quotas to offset the shortfall in world crude oil supplies resulting from the international embargo of Iraqi and Kuwaiti crude, some traders said.
But other traders discounted the OPEC news. It was not clear Friday how many OPEC members will actually attend the meeting, or whether any useful agreement will come of it.
In any case, traders agreed that Friday’s price drop was likely to be temporary, given continuing anxiety about the Iraqi situation, and that prices could zoom up again Monday if the Middle East heats up over the weekend.
“The market’s really still trading very much on news,” said Tom Bentz, director of futures trading at United Energy Inc. in New York.
Gasoline prices could resume their upward trajectory if continuing refinery problems threaten to constrain gasoline supplies. The automobile association reported Friday that gasoline supplies remain adequate for now.
But on Friday, a unit at the Lyondell refinery in Houston was shut down after a line ruptured and spewed a nontoxic catalyst into the air.
No fire was reported, but the unit--which each day processes about 90,000 barrels of heavy fuel oils into light petroleum products, mainly gasoline--will be closed for about 10 days. That will reduce the refinery’s total production of gasoline by about a third, said David Harpole, a spokesman for Lyondell, which is 49.9% owned by Los Angeles-based Atlantic Richfield Co.
Also on Friday, Chevron said it would take down a catalytic cracker unit at its El Segundo refinery for routine maintenance for three weeks beginning Sept. 7. The unit normally makes about 40,000 barrels of gasoline a day. But a spokesman said supplies of gasoline have already been stockpiled to tide the refinery over.
