Despite Iraq, L.A. oil wells remain shut.

Despite Iraq, L.A. oil wells remain shut in

Prices posted for crude oil produced in Los Angeles County were hiked $4 a barrel across the board last week -- $2 Monday and $2 Wednesday.

That is good news for Los Angeles producers and thousands of Angelenos with stakes in local wells, but bad news for oil consumers -- motorists, truckers, airlines, etc. The price hikes reflected similar actions across the nation and around the world.

Triggering last week's price hikes was the Aug. 2 invasion of Kuwait and subsequent seizure of its prolific oil fields by the military forces of Iraq's dictator, President Saddam Hussein. However, posted prices for crude produced in L.A. and elsewhere had been climbing since before mid-July in anticipation that the 13-member Organization of Petroleum Exporting Countries would succeed in cutting its excess production.

L.A.-based Unocal Corp., for example, raised posted prices for 17-degree-gravity crude from the Wilmington field by $1.20 a barrel July 12, $1.30 July 24 and $1 Aug. 1 before the $2 hikes of Aug. 6 and Aug. 8. That brought Unocal's posted price for Wilmington crude to $17.70 a barrel, up a thumping 73.5 percent or $7.50 a barrel in less than a month.

Prior to those Iraqi- and OPEC-driven price hikes, though, the excessive OPEC production had depressed world crude prices relentlessly to near the break-even cost of $8.50 to $9.50 a barrel for many California producers. Unocal's price for Wilmington crude, for example, skidded 41.7 percent or $7.30 in nearly a dozen consecutive cuts -- to $10.20 a barrel on July 6 from $17.50 on Jan. 15.

Thus, last week's seemingly hefty price was just 20 cents a barrel more than last January, and until the future is clearer, L.A. oilmen are not rushing out to uncap and resume production from shut-in wells. West Coast crude oil stocks remained above the lofty 80-million-barrels mark, according to American Petroleum Institute figures: a towering 86.6 million barrels as of Aug. 10.5 percent above the 78.34 million of a year earlier.

West Coast gasoline stocks of 27.88 million barrels, though, still are below year-ago levels, 31.62 million barrels, for inventories have not recovered from when many Western refineries were shut down for turnarounds. Indeed, West Coast gasoline output slid to 1.23 million barrels in the week ended Aug. 3 from 1.29 million a year earlier, API figures disclosed.

Given that supply situation, gasoline prices at the pump have risen steadily. A Mid-Wilshire Arco station, for example, was charging $1.169 a gallon for unleaded Aug. 8, compared with 89.9 cents earlier in the year.

The price had climbed to $1.039 by July 31, bounded up to $1.089 Aug. 1, reflecting the imposition of the new nickel-a-gallon tax for Proposition 111 approved by voters in June, before spurting another 8 cents by Aug. 8.

(That 8-cent-a-gallon pump price hike, a local analyst observed, actually was less than the 9.5-cent-a-gallon crude price hike during the same period -- $4 a barrel divided by 42 gallons in a barrel.)

The increases before Aug. 1 reflected the tightness in the local gasoline market, said Jim Wampner, manager of volume planning at L.A.-based Atlantic Richfield Co. Arco agreed Wednesday to comply with President George Bush's request to oil companies to freeze their prices.

Arco's wholesale prices for gasoline, diesel and jet fuel will be frozen for a week, Wampner said, and subsequently will be kept there unless they become substantially below competitors' prices. Thereafter, he said, prices will be dictated by short-term and long-term developments -- principally whether oil from Kuwait and Iraq remains unavailable and whether other producing countries will make up the difference.