Drivers in Southern California can expect ample gasoline supplies for the long Fourth of July weekend, analysts and oil industry officials said Thursday, adding that prices may climb again after leveling off in the last month.
Demand is expected to remain strong, even though prices remain relatively high in the wake of the Exxon Valdez oil spill. That will put pressure on prices to move up--but some state legislators are asking why prices haven't fallen as fast as they rose after the spill.
"How is it that prices can go up so fast and come down so slowly?" said state Sen. Herschel Rosenthal (D-Los Angeles). "That just bothers me very much. I have met with the oil companies separately, then with the gas stations, and everyone is pointing a finger at everyone else."
Rosenthal is co-sponsor of a resolution asking the state attorney general to investigate whether there was collusion to raise prices after Valdez spill and wants the state energy commission to study whether consumers are entitled to rebates.
The oil companies deny that the hikes resulted from collusion or a desire to exploit the spill. They argue that gasoline prices were increasing before the spill because of higher crude prices, tougher federal regulations, higher state taxes and increasing demand.
Officials also expect national demand for gasoline to surge over the weekend, traditionally one of the busiest driving times of the year. National consumption of gasoline had been running level with last year. But it jumped in the week ending June 16 to 7.6 million barrels per day from 7.4 million the week of June 9, said Mike Libbey, a spokesman for Chevron USA.
Usually Increase Slightly
Still, "it looks like supplies will be adequate," barring unforeseen disruptions, said Claudia Barker, a spokeswoman for the California Energy Commission. "If the price increases, it will be in response to increased demand," she said.
Oil company officials and gasoline distributors wouldn't speculate on how much prices might jump with demand over the weekend.
Traditionally, prices increase a few cents per gallon during peak driving periods, particularly along freeways or heavily traveled thoroughfares. Nationally, gasoline prices fell slightly in June, according to the Lundberg Survey of 12,000 gasoline stations.
The weighted average of all grades of gasoline and all types of service went down to 117.61 cents per gallon June 23 from 118.43 cents per gallon on May 19, the highest price in the survey since the March 24 Exxon Valdez oil spill.
Before the spill, the Lundberg Survey found an average national price of 100.39 cents per gallon.
In the Los Angeles area, the credit card price for regular unleaded gasoline, the most popular grade, had fallen to 116.5 cents per gallon as of June 3 from 117.5 cents per gallon on May 2, according to a survey of 405 area stations by Whitney Leigh Corp. of Tulsa, Okla. Before the spill, the price was 91.6 cents per gallon, Whitney Leigh reported.
Trilby Lundberg, publisher of the Lundberg Survey, said some retailers may want to raise prices to preserve profit margins. "It may be that some who have cut prices to compete may have to raise them in order to obtain liveable margins," she said.
Shutdown Won't Hurt
"I think they're going to stay pretty much where they've been all month, with regular unleaded in the range of $1.16 per gallon," said McDonald J. Beavers, president of Whitney Leigh.
Travelers headed for Las Vegas can expect little effect on supplies as a result of the shutdown Tuesday of the Calnev pipeline, which carries gasoline from Los Angeles.
The pipeline--the same one that exploded following a train derailment in San Bernardino in May--was shut down when a second train derailed near Las Vegas this week, Calnev spokesman Richard Kline said.
The pipe is being examined for damage, and gas supplies are being trucked to Las Vegas until the pipeline can resume operation, perhaps as early as today, Kline said.
"We have enough inventory to last several days without having to do any trucking," said Libbey at Chevron, one of the companies that sends gas through the pipeline.