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PUMPING PREMIUM : STATE RULES, OIL COSTS DRIVE UP GAS PRICES.

Byline: Gregory J. Wilcox Daily News Staff Writer

Retail gasoline prices took their biggest jump since the Gulf War this week - 10 cents or more per gallon - prompting state officials Wednesday to enact the first phase of an energy emergency response plan.

Industry officials and analysts blamed the run-up on escalating crude oil prices - which are at a 10-year high - tight supplies, increased demand, refinery production problems and higher production costs.

Atlantic Richfield Co. initiated the latest round of increases when it raised wholesale prices to dealers by 9.25 cents a gallon effective Tuesday morning. Other companies quickly raised their wholesale prices, and consumers immediately felt the pinch.

``That's one of the larger (increases) that I can remember,'' said Scott Loll, spokesman for Arco Products Co.

It was the first price increase by Arco reflecting costs associated with state-mandated cleaner-burning gasoline that had to be at distribution terminals Monday. The new fuel is expected to reduce pollution-forming compounds by 15 percent.

California refiners spent about $5 billion upgrading equipment to produce the new gas - in Arco's case it was more than $500 million - and all the companies have said they want to pass on the costs to consumers.

But Arco's price spike also reflects the higher crude oil prices, Loll said.

Consumers have been paying higher fuel prices for several months. Since the first of the year, gasoline prices have risen 32 percent and diesel prices 50 percent throughout the state.

Between March 22 and April 12 in the Los Angeles area, the price of regular unleaded increased 9.5 cents a gallon to $1.34, said Trilby Lundberg, publisher of the Lundberg Letter, which tracks market trends.

Gas prices still are climbing, and the cost of crude is the major reason, she said Wednesday.

In the past couple months, crude oil prices have increased about $7 per barrel, which translates to about 16 cents per gallon at the pump. But prices could drop quickly if the United Nations lets Iraq sell some of its oil on the world market.

Just a quick meeting of United Nations officials on that topic in New York on Wednesday sent oil prices plunging $1.27 a barrel. But when it became apparent no deal would be forthcoming, prices rallied, closing at $24.67 per barrel, up 40 cents for the day.

``If crude oil prices fall, then gasoline prices will fall,'' Lundberg said.

Nevertheless, the sharp increase in pump prices prompted the California Energy Commission to activate its emergency plan to minimize other price hikes that may ripple through the economy.

The first phase of the plan, enacted by the state Legislature in 1980 after political upheaval in the Middle East, requires all levels of the oil industry to report production information daily.

Ultimately, the state could control the distribution of up to 6 percent of the gasoline. But it cannot order a price rollback, said California Energy Commissioner Charles R. Imbrecht.

Imbrecht stressed that there is no acute shortage of fuel and urged consumers to refrain from rushing to top off their tanks.

``We are taking this action as a precautionary measure to ensure that we have the latest price and supply information,'' Imbrecht said. ``We are not yet facing an energy emergency.''

Still, the rising prices are creating economic pressures on some consumers who said they have started rethinking summer vacation plans.

Peggy Van Adelsberg, an accountant from Chatsworth, spent part of Wednesday afternoon shopping for the best price.

``I've been driving from gas station to gas station putting in a little bit of gas at a time,'' she said, fueling up her 1994 Ford Ranger at an Arco station at Ventura Boulevard and Lindley Avenue. ``It's upsetting, especially right before summer vacation. It's going to make me think twice about driving to San Francisco.''

She paid $1.40 a gallon, pumping 17.7 gallons, or $24.75 worth of gas, into her tank, just short of a fill-up. After she was finished, she discovered to her dismay that gas was four cents per gallon less at a Texaco station across the street.

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PHOTO (color) Filling station signs reflect rising gasoline prices this week.

Hans Gutknecht/Daily News
COPYRIGHT 1996 Daily News
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Apr 18, 1996
Words:701
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