Price Freeze on Gas May Be Irrelevant

As soon as the bombs started falling on Iraq, some major oil companies responded by freezing wholesale prices of gasoline and other petroleum products.

But the moves announced late Wednesday and early this morning provided no guarantee of what will happen at the nation’s thousands of independent gas stations, and the freezes may have been made moot by tumbling oil prices.

Some dealers instantly raised prices during the night, but when crude oil prices started crashing overseas, they had trouble selling their gasoline.

An independently owned Conoco station in Oklahoma City, for example, increased its price on unleaded gasoline to $1.44 from $1.19 within three hours of the attack on Iraq.

But the station’s pumps stood unused as customers lined up at a Texaco station across the street. Conoco station owner Phil Anderson brought the price down to $1.25 later Wednesday night after learning Conoco Inc. would not increase its wholesale prices.

“We are headed into a period of great uncertainty, and Conoco will help all its customers as best it can,” Conoco said in a statement from Houston.

“By holding the line on prices, we feel we can protect our customers against possible initial price spikes while we assess the effects of the Mideast conflict.”

Oil analysts this morning characterized the price freezes as public relations gestures by major oil companies that have come under increased scrutiny throughout the Persian Gulf crisis. Analysts said oil companies would have undoubtedly raised prices had crude oil shot considerably higher, but oil prices surprised many observers by crashing today on news that the war was proceeding smoothly.

The oil companies portrayed the price freezes as an act of patriotism.

“We pledged to show restraint at the time Iraq invaded Kuwait, and we can do no less now,” said Allen E. Murray of Mobil Corp. Also holding back prices were Chevron, Arco, Amoco, Sun and Shell.

Chevron Chairman Ken Derr said he hoped “that our jobbers and dealers will follow our lead, so that consumers will receive the full benefit.”