Diesel Joins Gasoline in an Upward Price March in Southland
This year’s unexpected spike in fuel prices has spread from motorists to truckers as the price of diesel fuel in Southern California leaped more than 16 cents a gallon in the last three weeks, a run-up already rippling through the consumer economy.
Gasoline prices are also continuing their upward march because of high crude oil prices, tight supplies and new state clean-air rules, according to the widely watched Lundberg Survey. And further increases are likely, analysts said.
The average price for unleaded regular self-serve gasoline rose to $1.34 a gallon as of Friday in the Los Angeles area, 9.55 cents above the price on March 22, according to the survey. Diesel rose nearly twice as fast to $1.53 a gallon.
Though it is a nationwide phenomenon, Southern California prices have been rising faster than those in the nation as a whole, Lundberg reported. Nationwide, unleaded gasoline prices were up an average of 7.23 cents a gallon; diesel prices were up nearly 8 cents a gallon.
The price hikes have commuters, truckers, wholesalers and gas station operators fuming.
“It really has the truckers up in arms,” said Hector Quevedo, manager of Big E Truck & Auto, a truck stop in Orange. Quevedo said his station now charges $1.60 a gallon for diesel fuel, up from $1.23 a gallon just two months ago.
“They keep complaining,” he said.
After easing a bit, crude prices resumed their steep climb Monday on the New York Mercantile Exchange. Crude oil for May delivery jumped 77 cents to close at $25.06 a barrel, just off last week’s peak of $25.45--highest since the Persian Gulf War.
The higher fuel prices seem sure to send consumer prices higher. In California, about 98% of all goods move by truck, and 80% of those trucks use diesel.
Indeed, higher energy prices nationally were the main contributing factor to a 0.4% rise in the consumer price index in March, the steepest increase in five years, the Commerce Department reported last week.
The reasons for the surge in prices vary, but Lundberg and others attribute most of the increase to a dramatic run-up in crude oil prices, which have risen $6 to $7 a barrel in the last two months to the $25-a-barrel range.
Crude prices have been rising nationally because of relatively tight inventories, unexpectedly strong demand for heating oil on the East Coast and anticipation of an agreement by the United Nations to allow Iraq to make limited exports of crude oil.
The prospect of a flood of Iraqi oil, which would lower world prices, has prompted oil buyers to hold lean inventories in hopes that cheaper crude will soon be available.
On the West Coast, the price hikes have been exacerbated by supply constraints as two major refineries--the Arco refinery in Carson and Shell Oil’s unit in Martinez, Calif.--were shut down temporarily by accidents.
The outages occurred at the same time demand for diesel was gearing up seasonally as the state’s farmers increased their use of the fuel by about 30%, according to Claudia Chandler, a spokeswoman for the California Energy Commission.
At the same time, new rules requiring the production of cleaner-burning diesel and gasolines in the state have limited the importation of nonconforming gasoline from other states to make up any shortfalls.
Observers doubt that prices will turn down soon. Indeed, it’s likely further price hikes are in the offing, as the cleaner-burning fuel works its way through the system.
Refiners estimate that it costs 5 to 15 cents a gallon more to make the cleaner-burning fuel than conventional gasoline; it’s unclear how much of that may already be reflected in retail pricing.
Meanwhile, truckers are trying to figure out how to recover their costs.
Bert Bystrom, owner of the trucking firm Coastal Connection in Duarte, said he is contemplating adding a 5% fuel surcharge to his rates.
“I don’t think I could go another week without it,” said Bystrom, whose firm contracts with about 20 independent truckers to haul containers. His diesel costs have risen to about $15,000 a month from $12,000, he said.
But others fear they will come out losers.
“The economy is in such a bad situation that we can’t raise our rates or apply a fuel surcharge, because it seems there’s always some little guy who will haul for less,” said Ron Guss, owner of Intermodal West Inc., a regional trucking company based in Commerce whose fuel costs have risen to $12,000 a month from about $8,800.
Gasoline wholesalers are also feeling pinched between refiners, who have raised prices, and retailers, who are trying not to raise them as much, according to the California Independent Oil Marketers Assn.
Times staff writer Don Lee in Orange County contributed to this report.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Fuel for More
Gasoline and diesel fuel prices in the Southland* have spiked in the last three weeks.
*
Gasoline
Regular, self- serve unleaded gasoline, in cents per gallon:
4/12: 134.04
*
Diesel
Diesel fuel, in cents per gallon:
4/12: 152.57
* Los Angeles, Orange, San Bernardino and Riverside counties.
Source: Lundberg Survey
