Changing of blends likely to cause spike

The San Diego Union-Tribune

San Diego County gasoline prices dipped over the past week, but that isn’t stopping experts from warning that price increases probably lie ahead.

The Auto Club of Southern California said the region’s average price for regular gasoline fell to $2.51 a gallon, down 3 cents from one week ago and about 18 cents cheaper than at the end of December.

“But we have seen an increase of about 2 cents in the last couple of days,” said Jeff Spring, an auto club spokesman.

Charles Langley, who oversees the gasoline monitoring project for the Utility Consumers’ Action Network, said he has also noticed an uptick in area prices.

“Eighty percent of the stations I’ve surveyed since Wednesday have had price increases,” Langley said.

Following record high prices in the spring of 2006, gasoline prices later in the year went into a three-month tumble that ended around Election Day. The auto club survey said the lowest price came during the first week in November, when San Diego’s average price fell to about $2.40 per gallon.

By the close of 2006, average local prices had climbed back to $2.69 per gallon.

Nationally, gasoline prices were unchanged for the week ended Jan. 29, at an average of $2.17 a gallon for regular.

Gasoline market monitors said this is the time of year that refiners do maintenance on their facilities and shift to the production of summer blend gasoline, a change mandated by state regulation. The blends are changed seasonally to minimize pollution.

Refiners can produce 8 percent to 10 percent more winter gasoline from a given quantity of crude oil than summer blend, making the summer fuel somewhat more expensive to refine.

The most recent state refinery production data indicates that while gasoline output increased during the week ended Jan. 26, California’s gasoline inventory declined slightly.

Susanne Garfield, a spokeswoman for the California Energy Commission, said some depletion of inventory is expected at this time of the year, along with erratic pricing at the pump.

Some refiners may cut prices to sell remaining stocks of winter gasoline, she said. At the same time, the reduction in output caused by refineries shifting to summer blends can put upward pressure on gasoline prices.

By the time the changeover is completed, most experts anticipate a clear pattern.

“If this is part of the usual trend, we would expect prices to rise,” said Spring, with the auto club.

The Foundation for Taxpayer and Consumer Rights in Santa Monica, meanwhile, alleged that politics played a role in the lower gasoline prices seen since the latter part of last year.

The foundation noted that refining profits fell sharply for Exxon Mobil and Chevron in the fourth quarter, saying that the companies sought to hold down prices to defuse high gasoline costs as an election issue.