Get set to pay more at the pump

ENERGY: Tight supplies have boosted wholesale prices, which could raise costs for motorists.

May 9, 2000

By DIANA McCABE The Orange County Register

California gasoline prices continue to ease back from mid-March highs, but a spike at the pump might be around the corner, a government report warned Monday.

Tight supplies of the state's cleaner-burning fuel have boosted spot prices by about 20 cents in the past few weeks. Unless these spot prices head down soon, California consumers "will be seeing fairly robust price hikes at the pump over the next few months," the U.S. Energy Information Agency said in its monthly outlook.

The average price of a gallon of regular gasoline in California was $1.66 Monday, down 13 cents from a high of $1.79 in mid-March. In Orange County, a gallon of gas cost an average $1.66 last week, down from $1.70 a week ago.

Production in the state has been off, said Rob Schlichting, spokesman for the California Energy Commission. Between April 14 and April 21, production dropped 14 percent, to 6.1 million barrels a week. At the end of April, that number had increased to 6.4 million barrels.

That's partly why there's been a rise in the spot price -- what independent dealers pay for gas -- in the Los Angeles area. When spot prices rise, it's a good indication that supplies are tight, Schlichting said.

Several refineries in the area have been down briefly the past few weeks for maintenance or to correct problems.

The Arco refinery in Carson, which supplies about 25 percent of all gasoline for the Los Angeles area, said one unit was operating at reduced capacity the past several weeks while a repair was made. But as of Friday, the unit was back up to its full rate of 98,000 barrels a day, said refinery spokesman Walter Neil.

Exxon Mobil said a routine cleaning of one unit slowed production at its Torrance refinery slightly last week. Reports of problems at Chevron's El Segundo plant and Ultramar's Carson facility were dismissed by the companies.

At the beginning of April, the spot price was 77 cents. But by May 2, it spiked to $1.11, still far from a March high of $1.37, Schlichting said. Friday, spot prices had eased to about 94 cents.

"Basically, we're coming out of the supply tightness," he said.

The energy report said it expects prices to decline throughout the rest of the nation during the summer driving season with prices averaging $1.40 to $1.45 a gallon. Nationally, the average price for a gallon of gas was $1.45 on Monday.

But experts warned that any glitches in refinery operations on either coast will cause prices to spike.

"The number of the refineries that can produce this special (reformulated) gas are limited," said Philip Verleger, a Newport Beach-based oil industry economist. "If there's a hiccup, prices will go up."

Smooth refinery operations are important as other parts of the country move toward cleaner-burning fuel by June 1. About one-third of the gasoline sold in the United States must meet federal reformulated gasoline specifications.

Supplies continue to remain tight. The United States is already competing with growing economies in Asia and particularly South Korea, which has stepped up its imports, said Jim Osten, an energy economist for Standard & Poor's.

Worldwide demand for oil is outpacing production. World oil inventories are expected to decline by 300,000 barrels a day through the rest of the year, according to the energy report. That will leave supplies in "a particularly precarious position," the government report said.

-- - (x@xxx.com), May 09, 2000

Answers

http://www.o cregister.com/business/gas009cci.shtml

-- - (x@xxx.com), May 09, 2000.

"The energy report said it expects prices to decline throughout the rest of the nation during the summer driving season with prices averaging $1.40 to $1.45 a gallon."

Pay more? According to this article, that only applies to California because of their special reformulated gas. Glad I don't live there.

-- Buddy (buddydc@go.com), May 09, 2000.

Buddy,

Gasoline is a fungible product, the prices will affect everyone sooner or later.

-- - (x@xxx.com), May 09, 2000.

Regular unleaded where I live went up to $1.52 per gallon a couple of days ago. That's a penny a gallon more than the March high here.

-- (durn@KY.driver), May 09, 2000.

The price per gallon has gone from $1.38 a gallon two-three weeks ago to $1.61 a gallon now!

-- In Wisconsin (prices_r@skyrocketing.com), May 09, 2000.

Interesting. In the Washington, DC metro area the prices have been falling for the last few weeks. A few weeks ago I had to pay 1.70 for 87 octane. On Saturday I found a station selling 87 for 1.52. The average price is around 1.61.

-- Buddy (buddydc@go.com), May 09, 2000.

Gas here in Phoenix has been dropping, albeit, not at the same rate it went up... A month ago was paying $1.75 for premium, now down to $1.59.

-- Rob (celtic64@inficad.com), May 09, 2000.