Gas Prices Expected to Rise Sharply
U.S. gasoline prices are expected to shoot higher in the wake of Tuesday’s terrorist strikes, as traders pushed crude oil prices up sharply and retailers in some parts of the country were reported to be selling fuel for $5 a gallon.
Oil companies and utilities increased security at refineries, pipelines and nuclear power plants although most were reluctant to share the details.
Fears of spikes at the gas pump came even as three major refiners said they have temporarily frozen the prices they charge gasoline dealers.
Energy industry officials emphasized that supplies of oil and gasoline were not threatened by the attacks. In fact, U.S. crude oil and gasoline inventories took an unexpected jump in the last week, according to the American Petroleum Institute.
But as surely as panic produces panic buying, so did Tuesday’s assault on the country spark price hikes and gasoline lines in several major cities. Some drivers reported watching the posted price change even as they pumped.
“It was unreal,” said Ray Lippert, who was heading his 18-wheeler west through Kingman, Ariz., when diesel prices leaped before his eyes at one truck stop. “I had just pulled into their lot and was getting ready to go to the pump when the wife said, ‘Check it out.’ ” In that short trip to the pump, he said, the per-gallon price jumped from $1.54 to $1.92.
“There is no reason for them to increase the fuel price that much,” Lippert said. “This is really going to put a hurt on this country. The independent driver just can’t afford it, and we haul most of the food.”
Trading in U.S. oil and gasoline futures was shut down Tuesday, along with all other financial markets. But crude oil prices zoomed to a nine-month high in London trading, indicating fears that the attacks could increase Middle East tensions or prompt retaliation that would disrupt supplies, analysts said.
The October contract for Brent crude oil, the London benchmark, closed at $29.06 a barrel, up $1.61, or 5.9%. Earlier in the day, it had risen as much as 13.1% to $31.05 a barrel, the highest price since Dec. 1.
The Organization of Petroleum Exporting Countries sought to reassure world markets by promising to pump more oil if needed to keep prices in check.
“OPEC’s members are prepared to use their spare capacity, if deemed necessary” to stabilize prices, OPEC Secretary General Ali Rodriguez said in a statement. “All member countries remain committed to strengthening market stability and ensuring that sufficient supplies are available.”
The American Petroleum Institute offered a similar soothing note in a statement.
“All information we have tells us that fuels are flowing normally to wholesale and retail markets throughout the United States,” the oil industry trade group said. “Our most recent data indicate that gasoline and diesel fuel inventories are adequate to meet demand. Refinery production remains strong.”
Two of the country’s biggest refiners, BP and Exxon Mobil Corp., said they have frozen the prices they charge dealers. Chevron Corp. committed to keeping its wholesale price steady at least until noon today.
“We’re making a statement,” said Paul Langland, Los Angeles-based spokesman for BP, which also owns the Arco and Amoco gasoline chains. “There’s no price gouging going on here.”
Exxon Mobil spokesman Tom Cirigliano said that “the situation dictates this,” but he cautioned that dealers are free to charge what they want.
“I’m sure that we’re going to see a lot of retail price jumps,” said Mary Welge, senior editor at Oil Price Information Service, which tracks gasoline prices.
The company was still collecting retail prices Tuesday but had seen wholesale increases of 5 cents to 15 cents a gallon on the West Coast, she said.
Fear of shortages caused prices to skyrocket in the Midwest, which has been plagued by supply disruptions this summer and last.
One Texaco dealer in Oklahoma City posted a price of $5 a gallon after a supplier told the owner that it was unclear when the next shipment would be available and at what price, the Associated Press reported.
Greg Seiter, a spokesman at the AAA Hoosier Motor Club in Indiana, said his office had received reports of gasoline prices rising to $3 and $4 a gallon in parts of the state in the wake of the attacks.
Nationwide, AAA said, the retail price of self-serve regular gasoline is $1.533 a gallon.
Truck drivers across the country were reporting huge increases in prices of diesel fuel, often as they were trying to fill their trucks. Prices at truck stops in parts of California, Arizona, Florida, Illinois and Missouri jumped 30 cents to 40 cents a gallon, said Jim Johnston, president of the national Owner-Operator Independent Drivers Assn. in Grain Valley, Mo.
“Some truckers are calling to say they’re being limited to 50 gallons, which barely covers the bottoms of their tanks,” Johnston said. “This could lead to a severe disruption if trucks have to creep from truck stop to truck stop and then wait in line to get 50 more gallons.”
Johnston blamed the spiraling diesel prices on “speculation and opportunism.”
Will Woods, who runs a California trade group for independent service station owners, fears that dealers will be unfairly blamed for any increase in prices. Wholesale prices had been rising in the last week, and several dealers received increases that took effect Tuesday, said Woods, executive director of Tustin-based Automotive Trade Organizations of California.
“It’s the oil companies that are jacking up the prices,” he said.
Prices should not be rising now, said Newport Beach-based energy economist Philip K. Verleger Jr.
“These horrific acts of terrorism did nothing to affect supply and nothing to affect demand,” Verleger said. “Companies that have raised prices--their executives deserve to be called on the carpet by Congress.”
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Times staff writer John O’Dell in Orange County contributed to this report. The Associated Press also was used in compiling this report.
