Copyright 2000 / Los Angeles Times
Los Angeles
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September 6, 2000, Wednesday, Home Edition
SECTION: Business; Part C; Page 1; Financial Desk
LENGTH: 824 words
HEADLINE:
CALIFORNIA MOTORISTS SEE 9-CENT LEAP IN GAS PRICES;
ENERGY: SURGE REFLECTS RISING CRUDE COSTS AND REFINERY
PROBLEMS. SOME ANALYSTS EXPECT LOWER PRICES SOON.
BYLINE: NANCY RIVERA BROOKS, TIMES STAFF WRITER
BODY:
California drivers are paying nearly a
dime more at the pump than they were a week ago, the Energy Department said
Tuesday. Gasoline station operators blamed the big oil companies, which in turn
blamed stubbornly high oil prices, minor refinery headaches and heavy
end-of-summer demand.
Weakening gasoline consumption in coming months
could help bring gasoline prices down unless crude oil prices, which briefly
flitted above $ 34 a barrel Tuesday, refuse to cooperate, energy analysts say.
But even people who analyze energy prices for the government are having
trouble pinning down the reason prices on California's spot gasoline market have
soared in the last two weeks, dragging retail prices along for the ride. "It's
kind of odd," said Tom Glaviano, gasoline market analyst for the California
Energy Commission. "This is a market that's easily spooked."
The average
price of self-serve regular gasoline jumped 9 cents to $ 1.79 a gallon this week
in California, according to a survey by the Energy Information Administration,
the Energy Department's research arm. The U.S. average for self-serve regular
gasoline rose about a nickel to $ 1.53 a gallon from the week before, based on a
survey of 800 gasoline stations.
California prices hadn't moved much in
prior weeks, even though crude oil prices have been rising since early August.
On Tuesday near-term crude futures in New York rose 45 cents to $ 33.83 a
barrel, nearing the $ 34.37 price milestone reached in March, which was the
highest closing price since November 1990.
Crude oil's latest gains
reflect market fears that an expected third increase in supply this year from
the Organization of Petroleum Exporting Countries, which will meet Sunday to
discuss the issue, would be insufficient to rebuild puny oil inventories
worldwide.
Tom Bentz, senior vice president of energy trading at Paribas
Futures Inc. in New York, told Bloomberg News that prices could reach
"ridiculous-type numbers--$ 50 maybe," because U.S. inventories are close to
24-year lows and growing economies in Asia are buying more oil than they did a
year ago.
"I'm thinking, conservatively, $ 40 sometime during the
winter," Bentz said.
California's average retail gasoline price, though
up 12 cents a gallon in the last two weeks, has not yet passed the huge
spot-market price spike of nearly 45 cents a gallon in the same period.
The Energy Information Administration is predicting that prices will
begin to decline around the country as summer drivers head back to the workaday
world, but California may take longer to see relief, said Dave Costello, an
economist with the agency.
California spot-market prices "show some
momentum in the pipeline still," he said.
Gasoline station owners--who
are the ones who must deal directly with complaining customers--said high Labor
Day prices are the fault of oil companies. Wholesalers are intentionally
reducing production and lowering inventory levels to send prices higher, said
Will Woods, executive director of the Automotive Trade Organizations of
California, a Tustin-based trade group representing more than 600 service
station dealers, primarily in Southern California.
"If they had made
enough oil and gasoline, there wouldn't be a spot price run-up," Woods said.
Chevron Corp. spokesman Mike Libbey said that the San Francisco oil
giant is making a relatively small profit on its marketing operations and that
prices have increased because of tight oil supplies and heavy summer demand.
Paul Langland, a Los Angeles-based spokesman for BP Amoco's Arco brand,
noted that several refineries around the state, including Arco's, are
experiencing minor operating problems and that some may be buying in
anticipation of routine maintenance shutdowns, a trend that would further
tighten the market for gasoline.
"It's a hot gasoline market, which is
bad for consumers," said Langland, whose company typically runs neck-and-neck
with Chevron as the state's top gas retailers.
Other energy commodities
rose Tuesday as well. The price of natural gas set another in a series of
records, rising 11.5 cents to $ 4.95 per million British thermal units in New
York futures trading. That was the highest closing price since gas futures began
trading on the exchange 10 years ago.
Heating oil futures also rose
Tuesday, settling at 97.97 cents a gallon, up about one-third of a cent, also on
the Nymex.
Fear of natural gas and heating oil shortages this winter
have caused natural gas futures to more than double this year and sent heating
oil up 26% in August.
Gassed Up
California gasoline
prices, which last peaked around the Fourth of July, soared just in time for
Labor Day. Analysts predict that prices will decline later this year.
*
f7 Average retail prices for regular gasoline in
California
July 10: $ 1.729 per gallon
Monday: $ 1.790 per
gallon
Source: Energy Information Administration
GRAPHIC: GRAPHIC: Gassed Up, Los Angeles Times
LOAD-DATE: September 6, 2000 
