Chevron Hikes Prices 5.6 Cents a Gallon

In a move that could ignite a new round of gasoline price hikes in the Southland, Chevron raised its wholesale gasoline prices by nearly 5.6 cents a gallon at 600 Southern California dealerships Monday, and industry observers said they expect other refiners to follow suit.

The increase, one of the largest single price hikes seen by dealers in recent months, reflects the strong global demand for crude oil, heating oil and diesel fuels caused by harsh weather and low inventories.

Explaining the increase, Chevron Products Co. pricing manager Jim Huccaby said gasoline prices in Southern California are depressed relative to the rest of the state and nation. As the state’s largest refiner and one of the top three retailers of gasoline, Chevron’s actions carry enormous weight in the state’s gasoline market.

Tight market conditions caused the Energy Department to predict Friday that gasoline prices would rise an average 5 cents a gallon nationwide by spring.

Chevron did not raise its prices in Northern California, where gasoline costs an average 7 cents a gallon more than in the Southland, Huccaby said.

Some Chevron dealers, such as Larry Keyser in downtown San Diego, raised their pump prices almost immediately Monday to reflect the wholesale increase. How did customers react? “They’re angry, just grumbling, as they always do when prices go up,� said a station employee who asked not to be identified.

But others, such as L.J. Scott of Chula Vista, said he would wait to see what other chains do. “If my competitors don’t follow, I’m hung out to dry,� Scott said.

Jan Speelman, executive director of Automotive Trade Organizations of California, an Irvine-based trade group representing owners of 2,500 gas stations in the state, said station managers from competing chains told her Monday that they expect similar price hikes soon.

According to the California Energy Commission, the statewide average price for unleaded gas on Dec. 30 was $1.198 per gallon, less than a penny more than the average in early November. Prices have dropped dramatically since April, when refinery shutdowns, high crude prices and California’s new clean-air mandates caused prices to zoom to $1.55 a gallon.