Summer Road Trips Fuel Jump in Gas Prices

Just in time for that last car trip of summer, gasoline prices in Southern California have jumped more than 13% in the past month and are not expected to drop until after Labor Day.

Prices for self-pumped regular are now hovering in the mid-$1.40-a-gallon range in Southern California, and richer grades of gasoline have been spotted selling as high as $1.95 a gallon.

Blame high end-of-summer demand crashing into California’s inelastic supply situation.

A healthy economy means more people are taking vacations, but the state’s refineries can produce only so much of the state-mandated, reformulated clean-burning gasoline, resulting in a price spike. Independent gasoline dealers contend that reduced competition in the state accentuates price moves.

Whatever the reason, consumers are upset and gasoline station dealers are worried.

“They’re not happy about it. They always wonder why it always goes up so high, so often,” said cashier Ken Hamilton at Steve’s Unocal in Ventura.

“If they were overpricing milk like the oil companies are overpricing gasoline, every mother in the country would be protesting it,” said Jim Porter as he poured $20 into his tank at a Winnetka gas station. “I just don’t see why prices are going up.”

“It’s horrendous,” complained Elizabeth Celik of Chatsworth, as she filled the tank of her sport utility vehicle. “I was beginning to wonder: ‘Am I the only one who notices this?’ ”

Gas station operators are also feeling the effects.

Business has dropped 20% at Mamdouh Hassan’s Shell station in Woodland Hills, Hassan said.

In the 12 years he has owned the franchise, Hassan has seen the gasoline market scare off customers before, but this is one of the sharpest increases he has ever faced. In order to meet his expenses, Hassan says, he has to charge $1.45 for regular gasoline--well above the state average and 3 cents higher than the gas at the Unocal station across the street.

“The suddenness of the rise is what had a big effect,” he said. “In one week the price increased by 10 cents. People got shocked, and we lost some customers because of competition.”

At a Mobil station in Northridge, full-service premium gas is a whopping $1.94 a gallon. With more drivers opting for the lower-priced gas they pump themselves, only six or seven people used those pumps Thursday, said owner Steve Haim.

“We use it as a parking space,” he said.

Shell dealer Bob Hanna said customers are complaining, but he says oil companies have raised the price he pays for gasoline.

“I’m losing a lot of customers,” Hanna said, staring at the deserted pumps at his Northridge station. “They’re not filling up. They’re buying $2 or $3--enough to get home.”

If motorists are angry about rising gas prices, don’t blame the local attendants, said cashier Dustin Holland at Rock Long’s Chevron station in Oak View, on California 33 in Ventura County.

“We don’t make the prices. The Chevron Corp. does,” he said.

And the oil companies? They cite supply and demand forces--refineries are operating close to capacity at a time when motorists are driving more--and competitive pressures to keep prices in line with other operators.

“The bottom line of the entire equation is we take the marketplace as we find it and we set the price to be competitive,” said Fred Gorrel, a Chevron spokesman.

But independent gas station operators say that a concentration of the market in the hands of only a few large oil companies keeps prices artificially high in times of high demand.

“We have only a few big oil companies that make California reformulated gasoline . . . and they also happen to be the companies that own most of the retail stations,” said Janet L. Speelman, executive director of the Automotive Trade Organizations of California, which represents independents and franchisees.

A respite in late July had Southern California motorists paying $1.2358 for a gallon of self-pumped, unleaded gasoline, according to the Lundberg Survey, a Camarillo company that samples 850 gasoline stations in Los Angeles, Orange, Riverside and San Bernardino counties. On Aug. 22, the most recent data available, the per-gallon tab had jumped to $1.3950, and prices have continued to rise since then.

But the state’s average price this week of $1.38 a gallon for self-serve regular unleaded and $1.59 a gallon for premium grade are the highest prices of the year. Nationwide, the average price for self-pumped regular unleaded this week is $1.24 per gallon, according to the U.S. Energy Information Administration.

The latest prices do not come near the highs of May 1996, when the average price in California hit $1.54 a gallon after refinery slowdowns decimated reserves just as summer demand was growing.

Gasoline is bound to cost more in California because of stringent fuel requirements instituted by lawmakers last year, said John Cook, a director of the petroleum marketing division of the U.S. Department of Energy. California’s reformulated gas rates are now 14 cents higher than the national average for regular gasoline, according to the DOE.

California’s geographic isolation from other large markets, such as the Midwest and the Northeast, also increases cost, he said.

“Usually it costs about 10 cents a gallon in transportation from the Gulf Coast to West Coast,” Cook said. “So most of California’s gasoline sales are based on home-grown [refinery] production.”

Last spring that home-grown production was in jeopardy when fires and accidents slowed eight refineries and forced local gas companies to tap their reserves. As summer traffic brought increased demand, oil companies responded quickly by repairing the refineries and pumping up production and imports.

At one point, said Scott Berhang, editor of the Oil Price Information Service, the local gas market became so saturated that nine Los Angeles-bound oil tankers were rerouted to destinations with higher fuel prices.

Oil companies overadjusted, however, even as refinery maintenance projects and a few break-downs were already reducing production. Earlier this month, Berhang said, oil reserves in California sank to a five-year low.

Now output at most California refineries has reached maximum levels as oil companies try to restock their reserves and provide for Labor Day traffic.

As the seesaw between supply and demand continues swinging, fuel production is already 10% higher than last year at this time. Berhang predicts prices will drop again as refineries overshoot their goals.

“California will be swimming in gasoline in another three weeks,” he said.

The price increase is particularly frustrating because of the timing. Officials at the Automobile Assn. of America estimate a record 34 million motorists nationwide will be on the road this Labor Day. There will be 7 million drivers west of the Rocky Mountains, the AAA said.

Ron Zachow of Reseda poured $42 worth of fuel into the mammoth tank of his Winnebago camper. Perhaps more than most, Zachow feels the pinch at the pump, but he said it would not change his plans to take the family on a road trip to Northern California.

“No sense buying a coach like this and worrying about 3 or 4 cents on the gallon,” he said.

* Times staff writer John O’Dell in Orange County and correspondent Scott Steepleton in Ventura County contributed to this story.