Seeing Red as Fuel Prices Rise : Truckers, Farmers Brace for Tax Hike, ‘Winter Gas’ Costs

Three federal and state regulations affecting gasoline and diesel fuel take effect today--all of which will raise prices at the pump.

The federal tax on gasoline and diesel goes up 4.3 cents, a vestige of President Clinton’s bedraggled plan to raise energy taxes to cut the federal deficit.

And while that hike by itself might not prove onerous, it is accompanied by the return to California service stations of so-called “winter gas”--which contains more oxygen to meet federal air pollution rules and costs from 3 to 5 cents more per gallon to produce.

In all, gasoline prices could jump 9 to 10 cents a gallon over the next few weeks, according to Chuck Throop of the Southern California Service Station Assn.

Already, however, truckers and farmers--just entering the thick of California’s cotton and rice harvest and the critical season for planting vegetables, alfalfa and wheat--say they are being hit hard by more drastic price hikes at the diesel pump.

Their big concern is with the new oxygenated diesel fuel that has gone on sale in the last few weeks under a new California Air Resources Board rule effective today.

Though ARB studies indicate that the new diesel costs just 5 to 6 cents more per gallon to produce than conventional diesel, consumers are complaining of price hikes of up to 30 cents a gallon and of shortages of fuel in some areas.

“There’s an extreme shortage of diesel fuel in Northern California,” said J.J. Gigoux, executive director of the California Independent Oil Marketers Assn., which represents wholesale suppliers. Gigoux cited shortages beginning last weekend at Chico, Stockton, Fresno and Sacramento wholesale fuel terminals.

“Diesel is the one that is a sleeper, that’s going to hit everybody,” Gigoux said. “It’s the lifeblood of the economy of this state.”

Some big interstate trucking companies have gone so far as ordering their drivers to fuel up outside the state, buying California diesel only in an emergency.

“Our drivers have been instructed not to purchase any fuel in the state of California unless on an emergency basis,” said Don Freymiller, chairman of the board of Freymiller Trucking Inc. Even then, the Bakersfield company--with 800 refrigerated trucks and $98 million in annual sales--has imposed a 50-gallon limit on its drivers.

“A lot of interstate trucking companies are telling their drivers to fuel up before coming into California,” Freymiller said. “I predict that truck stops are going to lose a lot of business.”

Freymiller says truckstop diesel will cost 11 to 12 cents more than usual under the new anti-polluion rules. “That’s 2 cents a mile more for my cost of operation, and that’s $2 million,” he said.

Trilby Lundberg, publisher of the Lundberg Letter, which tracks petroleum product consumer trends, said Thursday that wholesale costs increased 6 to 20 cents a gallon in mid-September in the Sacramento area as the new diesel was introduced. Other areas of the state generally showed lesser increases, Lundberg said.

Some farmers are reporting bigger price hikes.

Jim Crettol--who farms sugar beets, onions and 1,200 acres of cotton near Bakersfield--said he topped off his 30,000 gallons’ worth of storage tanks three weeks ago with 51.8-cent diesel. Now, he says, his distributor wants 87 cents a gallon.

Crettol’s diesel stockpile will keep his tractors running for three months.

“The ARB was always very assertive that these problems wouldn’t happen,” said Merlin Fagan, director of environmental affairs for the California Farm Bureau Federation. “We hope they are abberations . . . but the complaints from our members in certain areas are beginning to increase.”

ARB spokesman Bill Sessa said the new requirement to sell oxygenated diesel is playing “a very minimal part” in the price hikes at the pump. “The difference between whatever it costs to make and what it costs to buy has nothing to do with our rule,” he said Thursday. “It has to do with the oil companies’ own marketing practices and other forces.

Unocal Corp. and Chevron Corp., both major refiners of the new diesel, credit tight supplies for the high current prices. “When you have a new tax or a new provision coming in, you see these kind of fluctuations, “ said )Al Jessel, a strategy planner for Chevron.

As to shortages, Sessa acknowledged that supplies in some areas have run out. But he attributed the shortages to farmers and others topping off their supplies before today’s deadline.

The ARB rule is designed to cut public exposure to potentially cancer-causing air pollution, including soot. The new diesel rule will remove a quarter of the soot from California’s skies, the board estimates. A few refiners have been granted up to one year to introduce their new diesel.

Fuel Taxes in U.S. and Abroad

Although the federal tax on gasoline and diesel goes up 4.3 cents per gallon today, U.S. fuel taxes, corrected for inflation, have been relatively stable since the end of World War II.

U.S. Fuel Taxes

Figures are in 1991 cents per gallon, adjusted for inflation, for retail domestic unleaded gasoline.

1993: Total taxes: 36.0 cents

What Americans Pay Compared to Europeans

The average 1993 price and tax in dollars for a gallon of gasoline in the United States lags far behind Europe.

Country Tax Retail Price* France $3.00 $3.78 Germany 2.57 3.50 Italy 2.87 3.85 Spain 2.21 3.19 Britain 1.74 2.72 United States 0.317** 1.13

*Includes tax

**Before tax increase

Source: Cambridge Energy Research Associates

Researched by MICHAEL PARRISH and ADAM S. BAUMAN / Los Angeles Times