Rising Gas Prices Expected to Worsen, Thanks to Y2K Fears.

If you think gas prices have crept up in recent days, just wait until the final weeks before Dec. 31, 1999.

As concern grows among industry analysts that Y2K problems will disrupt supplies, pump prices could jump another 15 cents or more a gallon before the end of the year.

That would come on top of the nickel-a-gallon increase expected to hit this week as the result of a hike in the cost of crude oil and heightened demand by holiday travelers.

Analysts don't expect Y2K gasoline shortages, but they do anticipate consumers keeping their tanks full and even storing additional gasoline on the chance that pumps won't work or trucks can't deliver fuel to retailers.

"People will keep their tanks topped just in case problems arise, and that will (artificially) drive up demand for a few weeks," said Fred Rozell, who tracks retail gasoline prices for the Oil Price Research Service.

Meanwhile, the major oil companies are urging consumers to remain calm.

"It's good to be prepared, but we are encouraging people to not top off their tanks or store gasoline in unsafe containers," said Atlantic Richfield Co. spokeswoman Marylou Flynn. "Not only can people get hurt, but they can also damage the environment by releasing fumes into the atmosphere."

Flynn said Arco started making Y2K preparations in 1995 and company computers are now ready to handle the change. She said part of the planning included making more gasoline available to consumers at the end of the year.

The California Independent Oil Marketers Association, a Sacramento-based trade group that represents mom-and-pop stations, has expressed concern that consumers may over-react to Y2K fears.

"State and federal regulators have been trying to make sure that computers at gas pumps are working properly," said group spokeswoman Evelyn Gibson. "The industry as a whole seems ready for this, though mom-and-pop stations may be the least prepared. Our biggest worry is whether people will start working from the top of the tank."

If that happens, it could cause a temporary spike in both demand and pump prices - and perhaps even gridlock at gasoline stations.

The price hikes got a jump-start last week when crude-oil futures surpassed $26 a barrel - nearly three times the price at this time last year and the highest level since the Gulf War. The increase is due in part to supply cuts OPEC imposed on its members earlier this year.

As the price of crude oil increased, California was hit hard by price hikes at the pump, mostly as a result of a series of refinery fires earlier this year. Prices rose as much as 50 cents a gallon in February and March.

As refineries got back online, prices fell gradually. Yet even after three consecutive months of declining prices, regular unleaded now averages $1.36 a gallon. That's about 27 cents a gallon higher than during Thanksgiving of last year, according to the Auto Club of Southern California's most recent survey released last week.

What's more, as oil production has been diverted from gasoline to heating oil for the winter, wholesale gas prices have crept even higher. Rozell believes consumer prices will follow in December before falling again in early to mid-January. After Y2K worries recede, he thinks OPEC will be tempted to break its quotas.

"OPEC has always broken down in the past, and Venezuela has always gone first," Rozell said. "I don't know what the magic (price) is, but $30 (a barrel) might be as high as it goes."