L.A. County crude oil prices back on the march.

7 weeks of silence broken by 2 price hikes in 10 days

Prices for crude oil produced in Los Angeles County, after remaining unchanged for more than seven weeks, were hiked twice in 10 days this month by posting companies, reflecting lower inventories.

This, of course, was heartening for independent producers and thousands of Angelenos with stakes in oil wells.

Following the lead of Chevron Corp. in the latter part of October, Unocal Corp., for example, hiked its posted prices by 50 cents a barrel across the board for crudes the L.A.-based major buys from local producers.

Just 10 days earlier, as noted, Unocal raised its posted price by 55 cents to $16.95 a barrel for relatively light, 29-degree gravity crude from the Long Beach/Signal Hill field. The company also increased its posted price that day by 15 cents a barrel for relatively heavy, 17-gravity crude from the Wilmington field.

Among other companies raising prices similarly, according to California Independent Petroleum Association: Chevron, Enron Oil Trading & Transportation Co., Koch Oil Co., Mobil Corp. and Texaco Inc.

Posted prices had remained unchanged here since Aug. 20 when Unocal hiked them by 80 cents a barrel for Long Beach/Signal Hill crude and by 20 cents a barrel for Wilmington crude.

(The higher the gravity is, the lighter the crude and usually the higher the price; the lower the gravity is, the heavier the crude and generally the lower the price. When refined, lighter crudes yield more top-of-the-barrel products, such as gasoline and jet fuel, while heavy crudes traditionally yield more bottom-of-the-barrel products, such as heavy fuel oil and ships bunker oil.)

Crude oil inventories on the West Coast slipped by 5.9 percent to 72.52 million barrels on Oct. 18 from 77.30 million barrels a week earlier and by 0.9 percent from the 73.41 million a year earlier, according to the latest figures reported last week by American Petroleum Institute. West Coast gasoline stocks skidded similarly to 29.72 million barrels, API continued, down by 3.4 percent from the prior week's 30.81 million and by 6.3 percent from the 31.76 million a year earlier.

Higher crude prices and lower inventories often translate to higher gasoline prices, but this time the result has been mixed. L.A.-area retail prices at a number of Unocal stations, indeed, did rise, but they held firm at others. However, prices at a number of Arco stations actually slipped a penny or two.

Although allowing gasoline prices could mark time for a while, Jim Wampner said price weakness is the greater probability here. But there certainly will be no increase in gasoline prices here, quickly added the volume planning manager at L.A.-based Atlantic Richfield Co.

Crude here, though, should see more price increases, declared Jerry V. Hoffman, president of California Independent Petroleum Association. "There's a lot of room for crude to be increased," reasoned Hoffman, who also is senior vice president and chief financial officer of Berry Petroleum Co., a Taft-based independent producer.

He explained his reasoning by contrasting the aforementioned posted prices of local crudes to the $23.50 spot price last week for West Texas intermediate crude.

While Hoffman indicated optimism over the short term for local crude prices, his outlook for at least the intermediate term was downright gloomy because of recent and pending developments affecting California's supply and demand:

* Offshore production in Santa Barbara County is projected to double by Jan. 1, to 60,000 barrels daily.

* The Kern River pipeline is scheduled to start bringing natural gas from the Rocky Mountain area to be used to heat steam for injection in heavy crude oil wells in Kern County. That gas will displace about 30,000 barrels daily of oil currently being used for steam injection to facilitate the flow of the thick, gooey crude there, Hoffman said.

* Unocal has agreed to buy most of Shell Oil Co.'s L.A. refinery. When that transaction is completed, Hoffman lamented, Unocal will close most of its own refinery here, reducing the market for crude by about 108,000 barrels daily.

* The Unocal loss would be in addition to a half dozen other refineries -- Anchor, Chemoil, Demmeno, ECO, Edgington, Newhall -- that have closed their doors in the last 30 months. When Unocal is added to that list, it will represent a loss of 200,000 barrels daily, Hoffman mourned, and "more refinery closings are expected."

About the only hope he sees on the horizon is for the federal government to relax its regulations so as to permit Alaskan North Slope crude production, currently running about 1.7 million barrels daily, to be exported. The government currently prohibits export of the Alaskan crude, Hoffman grumped, and that has created an excess of crude supply on the West Coast, depressing crude prices here.

If Alaskan North Slope crude could be exported, he asserted, "it would raise crude prices here." But the Bush administration has called for only 25,000 barrels daily to be exported; whereas, Hoffman contended, no export restrictions should left on Alaskan crude.