Expected dip slow in coming.
The Daily News of Los Angeles
With most refinery problems fixed and the Labor Day weekend peak over, Southern California’s gasoline prices were expected to drop this week – but they didn’t.
Prices fell slightly after the holiday from their recent high of $2.137 a gallon for regular on Aug. 29 but reversed course on Thursday and went back up half a cent to $2.129, according to the Automobile Club of Southern California.
“Oil companies are sucking it for everything they can,” said Will Woods, executive director of Auto-Ca., a trade group representing service station owners. “It does take awhile to recover from a price spike, but it should have been happening quicker than this.”
Snarls in the production chain, a shortage of gasoline caused by a pipeline burst in Arizona and a surge in demand drove retail prices up nearly 40 cents a gallon in a two-week span leading up to Labor Day.
Experts said the holiday would signal a gradual drop in prices, but it hasn’t.
As retail prices languish near record highs, the California Energy Commission said the spot market has plunged 55 cents, down to $1.145, in the past two weeks. The price of crude oil also dropped below $29 a barrel Thursday, a mark it hasn’t seen since the beginning of July.
“All the indications are there for gasoline to be coming down,” said Rob Schlichting, a commission spokesman. “Wholesale’s down, demand historically goes down after Labor Day, then around October, we switch to winter blend, which boosts production and should help with supply.”
Dealers say their prices aren’t dropping, either, forcing them to pass higher costs along to motorists.
Officials of most refineries declined to comment on retail prices, referring questions to the Western States Petroleum Association.
“WSPA is not in the business of tracking prices,” said Anita Mangels, a spokeswoman for the group.
Dan Cummings, a spokesman for BP, which operates Arco and Thrifty stations in Los Angeles, said prices are dropping, but couldn’t speculate on the rate of decline.
“We’re seeing prices beginning to fall as supplies rise here on the West Coast. Low inventories, outages in the East, as many as five refineries with problems in the West and pipeline issues in Arizona made a convergence of difficulties before. Prices have stabilized and are starting to lessen.” Doug MacIntyre, a senior oil market analyst for the EIA, a subsidiary of the federal Department of Energy, said there often is a lag time of two weeks between wholesale price drops and retail prices.
Consumer groups said there is a danger the public is getting used to high prices at the pump.
“With gas prices, there’s a hard push upward that’s so extreme that when we get under $2 a gallon, we feel real good about it, as if it were acceptable,” said Doug Heller, a senior consumer advocate for the Foundation for Taxpayer and Consumer Rights, based in Santa Monica.
“The oil industry sets us up with expectations of such incredibly high prices that we’ve come to live with prices that are still excessive and outrageous.”
Contact the author: Brent Hopkins, (818) 713-3738 or brent.hopkins(at)dailynews.com