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Price of gasoline declines

In California, it's down 7.9 cents to $3.725. The South remains most affected by Ike-related refinery shutdowns.

September 23, 2008|Ronald D. White | Times Staff Writer

The price of crude oil jumped dramatically Monday as the dollar's value fell and traders jockeyed on the last day of trading on the October futures contract. But gasoline prices didn't follow crude's lead.

Having surged after Hurricane Ike, prices at the pump fell nationwide as refineries shut down by the storm returned to service.

The Energy Department's weekly survey of filling stations showed Ike's effect was still being felt east of the Rocky Mountains last week. That made for another rare period during which gasoline in California was not substantially more expensive than it was nationally.

The average price of a gallon of self-serve regular gasoline nationally fell 11.7 cents to $3.718 over the last week, according to the Energy Department survey. In California, the cost was down 7.9 cents to $3.725.

The South got some price relief, but it remained the most expensive region for gasoline because it was more affected by the refinery shutdowns. Gasoline there fell 13.6 cents to an average of $3.821 a gallon.

The national average price of gas is 90.6 cents higher than it was at this time last year. The California average is 76.4 cents higher than the year-ago price.

Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said he believed that Monday's $16.37-a-barrel surge in crude oil to $120.92 "could be seen more than anything else as a referendum on what the bailout package and a weak dollar means in terms of economic growth -- not very much good."

Officials warned that gasoline supplies remained tight. Of 22 refineries affected by the hurricane, two have resumed full production, 15 have electricity restored and are starting up, and five -- including the two largest, Exxon Mobil Corp. and Valero Energy Corp. -- remain shut down.

Those going through start-up procedures might not be back on line for a week or longer, said Doug MacIntyre, a senior market analyst for the Energy Information Administration.

"We should see some significant improvement in output by the end of the week, but it can take several days to weeks to get them running at full capacity again," MacIntyre said. No estimates are available on when the five that are shut down would resume production.

Motorists may still face higher prices should start-up efforts stumble or take longer than expected, Kloza said.

Despite lower prices at gas stations, Southern California business owners aren't feeling much in the way of relief.

Lisa Nguyen, who helps run the Carbon Grill, a family-owned and -operated catering service, said her business was weathering across-the-board increases in everything she bought because of her suppliers' fuel costs. Yet the family has not raised prices to compensate. For the moment, they're uneasily content to cover their operating expenses and employee salaries.

The Nguyen family brings their own food-preparation equipment to their job sites, necessitating the use of large vehicles like her 2004 Nissan Titan, which gets 10 to 12 miles a gallon. Each vehicle is driven 250 to 300 miles a week from the family's base in Azusa to catering jobs and to weekly farmers markets in West Los Angeles, Santa Monica, Covina and Diamond Bar.

The food, which Nguyen describes as Mexican with an Asian flair, always draws a crowd at the farmers markets, she said, but she plans to hold prices where they are. Her customers, she said, have been battered by the same high prices at the pump.

"There's always that uncertainty that people might not have the extra money we might charge," Nguyen said. "In this economy people are holding on to their money and cutting out things that are more expensive. We don't want to be one of the things they cut out."

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ron.white@latimes.com

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