The Good Bad News: Gas Prices Are Up--but Not to ’97 Range

It was nice while it lasted.

Gasoline prices in Los Angeles and Orange counties have bounced about 20 cents higher in the last month, thanks partly to increased demand as Memorial Day nears.

Add to that some refinery problems--chiefly a brief reduction in supply because a DWP power outage on April 28 knocked out three major refineries in Wilmington and Carson for a day or two--and you get prices hovering between $1.15 and $1.20 per gallon for regular unleaded self-service gasoline in the region.

Even with the jump, gasoline is selling below last year’s levels locally and is less expensive than the gas sold in the San Diego and San Francisco areas. And it’s still a lot cheaper than a like amount of bottled water or orange juice, and significantly less pricey than, say, Visine--assuming one would want to buy a gallon of eyedrops.

Low crude oil prices are the primary reason behind cheap gasoline. But an El Nino-sponsored price war gets some of the credit for the good old days of March when local gasoline prices bottomed out locally at 98.01 cents per gallon, said Trilby Lundberg, whose Camarillo-based Lundberg Survey tallies prices twice a month at more than 800 gasoline stations in Los Angeles, Orange, Riverside and San Bernardino counties.

In the March 6 survey of 10,000 service stations nationwide, the U.S. average price for unleaded regular was $1.04 a gallon.

“Dealers were competing heavily--in some cases, sacrificing their own margins--because the cars were cold out in the garage while the people were warm in the house eating soup,” Lundberg said.

Since then, the sun has come out more often than not, and pent-up demand has put extra drivers on the road and oil prices have stabilized between $15 and $16 per barrel on the New York Mercantile Exchange. That’s up from around $13 a barrel in early March, but still well below the more typical $22-a-barrel range of last September.

In addition, the gasoline sold during warmer months in California is more expensive to produce, said Harry Johnson, pricing manager at Atlantic Richfield Co.

“Gasoline prices had gotten very low, and I think it was just inevitable that they were going to start going back up,” Johnson said. “It’s a normal kind of ebb and flow in price.”

A brief Department of Water & Power electricity outage in Wilmington and Carson on April 28 shut down the Texaco, Tosco and Ultramar Diamond Shamrock refineries, cutting by about a third the state’s production of nearly 900,000 daily barrels, said Rob Schlichting, a California Energy Commission spokesman.

The spot price of gasoline in Los Angeles responded by jumping to more than 80 cents per gallon, up more than 20% from the week before. The spot price has since slipped to the 65-cent range as the refineries have resumed full operations.

But demand for gasoline has increased.

“It seems like in March and April, everyone said, ‘We’ve got to get out of here,’ ” said Mike Libbey, a spokesman for San Francisco-based Chevron Corp. “People were tired of being cooped up.”

The most recent Lundberg Survey, for the week of April 24, found L.A.-area prices averaging $1.08 per gallon for regular self-service unleaded, compared with $1.06 per gallon nationwide. A year ago, unleaded gasoline was selling for an average of $1.36 per gallon in the Los Angeles area and for an average of $1.22 per gallon nationwide.

To anyone complaining about the direction of gasoline prices, the John S. Herold Inc. oil industry consulting firm has some comparisons. With crude oil at about $15.25 per 42-gallon barrel, as measured by futures contracts on the New York Mercantile Exchange, gasoline would run about $45.36 per barrel. That gasoline price represents only a 14% increase since 1989, whereas oil is down 22%.

In comparison, Evian water costs $189.80 a barrel, up 20%; orange juice costs $251.16 per barrel, up 115%; and Visine costs $238,133.21 a barrel, up 118%.

“Oil is unbelievably cheap,” said Art Smith, chairman and chief executive of John S. Herold, which is based in Stamford, Conn. “Today’s depressed prices for all oil products--down about 20 cents per gallon thus far this year--suggest that American energy consumers could save almost $190 per person on oil product purchases in 1998.”

Nancy Rivera Brooks can be reached by fax at (213) 237-7837, or by e-mail at nancy.rivera.brooks@latimes.com