New formulation may be driving up gasoline prices.

The new, state-mandated cleaner-burning gasoline, which costs more to produce, may be causing a major spurt in wholesale gasoline prices in L.A. of more than 6 cents a gallon, oil industry sources said.

Wholesale or "rack" gasoline prices moved up from 66.05 cents a gallon on Feb. 14 to 72.675 cents on Feb. 28, said Jack Peckham, editor of U.S. Oil Weekly, an oil industry trade publication. In the same period, retail prices in Los Angeles inched up between 1 and 3 cents a gallon, sources said.

Oil industry experts say retail prices should roughly follow wholesale's upward trend and significant increases at the pump could hit in the next couple of days or weeks.

"Rack prices are going through the roof and it's all because of your (state's) regulation," Peckham said.

The California Air Resources Board has required all gasoline refiners to be producing the new fuel - which is known as CARB gasoline and is supposed to reduce smog-causing chemicals by 15 percent - by March 1, said Allan Hirsch, CARB spokesman. By June 1, gasoline marketers are required to have switched to selling just the CARB gas, he said.

He added that as of March 1 all of the state's 13 refineries are making the CARB gas and many started making it in January and February.

CARB has estimated that it costs oil companies 5 cents to 15 cents more a gallon to produce the fuel, which is touted as the cleanest-burning gasoline ever produced on a mass scale.

Retail prices inch up

Pump prices in the greater Los Angeles area rose only about 2.5 cents a gallon to 121.9 cents a gallon between Feb. 12 and March 4, according to Computer Petroleum Corp., a St. Paul, Minn.-based gasoline price tracking company.

CPC Vice President J. Scott Susich said he heard reports that the L.A. "spot" market for gasoline, where service stations buy excess gasoline produced by refiners, rose 9 cents a gallon in one day.

The increase in wholesale prices has not yet been "passed through" to gas stations as of last week, he said.

L.A. drivers should "expect to see significant prices at the pump over the next 10 days," Susich said last week.

The higher cost of CARB gas and the fact that it is only produced and sold in California is the reason for rising pump prices, said Peckham of U.S. Oil Weekly.

"You guys have created yourselves a little island of political correctness and you're going to pay through the nose for it," he said.

Other oil industry sources said other factors, including a increase in the worldwide price of oil and problems with three Texas refineries, may also share the blame for the increase in gasoline prices in recent weeks.

The price of a barrel of West Texas crude increased from $19.03 a barrel on Feb. 15 to $20.18 on March 6.

Susich of CPC noted that in the last few weeks two major refineries in Texas have been shut down for scheduled maintenance and another has been shut down because of equipment problems.

Hayden Winkler, head of pricing for the Western U.S. for San Francisco-based Chevron Corp., said what Chevron charges its dealers increased by 4.3 cents a gallon between Feb. 14 and March 6.

Pump price up 1.5 cents

In the same general time period, from mid-February to early March, retail prices have moved up 1.5 cents a gallon to $1.21.9, he said.

Winkler said his job is to base prices on what the competition is doing. He said he did not know if Chevron's prices reflect increased costs of producing CARB gas.

"Arco has not started any process of passing through the cost of the CARB gasoline," said Scott Loll, spokesman for L.A.based Atlantic Richfield Co. He declined to discuss prices further.

But Charlie Mulcahy, who owns two Arco franchises in Wilmington and Paramount, said Arco has raised the price he pays for gasoline by 5 cents, just in the last two weeks.

Mulcahy said Arco has been "vague" about the reasons for the increase. He said he has seen price spikes of 2.5 cents a gallon from time to time, but the last time he saw a price increase of 5 cents a gallon was during the Persian Gulf War.