Drivers’ Patience Hits Empty as Gas Prices Soar

Don’t blame us.

That has become the catch phrase among oil companies, gasoline wholesalers and service-station owners as California gasoline prices have jumped about 30 cents a gallon in recent weeks.

As regular unleaded topped $1.50 a gallon at many Southland stations Friday, drivers griped and some even threatened a one-day gasoline boycott.

“It’s costing us 30% more to truck our merchandise than it did a few days ago,” said James Rice, who runs the regional office for sporting goods maker Wilson Inc. in San Clemente. “We’re really stuck.”

Gasoline makers and sellers deny that they are milking the surge for extra profits.

“I’m making 8 cents a gallon, same as usual, just enough to cover my expenses and leave a little to take home,” said Mary Lou Mendez, owner of a Costa Mesa Chevron station.

“It’s clearly not going to us,” said Don MacPherson, president of the California Independent Petroleum Assn., which represents oil companies. “We didn’t have anything to do with this and we don’t benefit from it.”

But industry analysts said savvy operators all along the petroleum distribution chain are profiting from the recent upswing, principally refiners whose plants are pumping at full capacity.

“To say we’re gleefully profiting would be wrong, but any refiner who is operating efficiently in today’s market is probably pleased with its share of business,” said Mobil Corp. spokeswoman Carolin Keith.

Mobil’s Torrance refinery, which produces 130,000 barrels of fuel a day, was functioning smoothly until Friday, when a leak caused a short-term closure that will not affect production, Keith said.

Among the other beneficiaries are wholesalers and retailers who saw the trend coming, stocked up on gasoline and waited for prices to rise.

About 30 maverick tanker owners also guessed right, and sent ships normally routed to Asia and the East Coast to California.

“This is like getting a winning lottery ticket,” said Bruce Schwartz, a director in Standard & Poor’s corporate ratings division. “It’s infrequent and short-lived, but they will make money.”

The California Energy Commission says the price spike should subside soon because the state’s gasoline inventories, while 4% lower than a week ago, are more than 14% higher than they were this week in 1998.

The perception of a short-term gasoline shortage may have outweighed the reality, spurring wholesalers to buy larger-than-usual supplies, sending prices skyward, said commission spokesman Rob Schlichting.

“I kind of equate it to a run on a bank,” Schlichting said. “It’s basically panic without a whole lot to back it up.”

Gasoline prices began to move last month after the Organization of Petroleum Exporting Countries announced cutbacks in Middle East oil production. That sent crude oil upward by about $6 a barrel and, almost immediately, sent reverberations through gasoline pumps from coast to coast.

In California, a freakish series of refinery stoppages, skimpy reserves and growing demand compounded the price pressure, oil company officials said.

Bay Area refineries operated by Chevron and Tosco Corp. closed after explosions and fires. Arco and Exxon also suffered short-term refinery problems.

Because California requires cleaner-burning gasoline than other states, companies had no ready source to bolster supplies.

Chevron, which is producing 10% less gasoline because of a refinery outage, had to buy 100,000 barrels of high-octane fuel originally headed for Singapore, and shop the spot market to plug its supply gap.

“It’s over $1 [a gallon, wholesale]--that’s unheard of,” Chevron spokesman Fred Gorell said. “When you replace gasoline, you pay a premium.”

Oil company officials said the complaints about prices reflect just how spoiled drivers have become after years of low prices. Adjusted for inflation, gasoline prices are still lower now than they were decades ago.

Nevertheless, frustration at rising gasoline prices reached the boiling point Friday in Los Angeles, where community activists staged a demonstration beneath a giant gas station sign peddling the latest price hikes.

The small group of local pastors and social workers called on oil companies to lower prices immediately, contending that the increases have particularly hurt fixed- and low-income mothers and seniors.

Mothers now have to make the choice sometimes between milk for their kids and gasoline, said activist Dr. James Mays, an Inglewood general practitioner.

*

Times special correspondent Stephen Gregory contributed to this report.

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Ouch!

Gasoline prices shot up in early March after hitting historic lows (when adjusted for inflation) in 1998. Rising oil prices and refinery closings have been blamed. Average price in California for regular unleaded, per gallon (prices are for Monday of each week):

March 29: $1.456

Source: Energy Information Administration