Unleaded regular is 40 cents higher than one year ago

www.signonsandiego.com By Frank Green UNION-TRIBUNE STAFF WRITER February 8, 2003

Gasoline prices in San Diego County and elsewhere in the United States are spurting like a new well, pumped up by refinery glitches, war talk against Iraq and production cutbacks in strike-torn Venezuela.

In the past two weeks, area motorists have seen the cost of a gallon of unleaded regular gas spike by 6 cents a gallon, to about $1.71, according to the Utility Consumers' Action Network's survey of 550 service stations.

That's 40 cents higher than the price of gasoline in San Diego County a year ago.

"Crude oil is now in the $32-to $33-a-barrel range, about $10 higher than this time last year," said Paul Langland, a spokesman at Arco parent BP.

Langland attributed the price surge for crude oil to production problems last week at a ChevronTexaco refinery in El Segundo and jitters about developments in Iraq and Venezuela.

Meanwhile, the Automobile Club of Southern California said yesterday that its survey of San Diego County stations indicated the average price of fuel has jumped to $1.74 a gallon. The club does not check prices at as many outlets as UCAN's survey.

"Gasoline markets have reflected war fears among traders, and that continues to send prices higher," auto club spokeswoman Carol Thorp said. "Gasoline refinery activity is down because of tight supplies of crude oil worldwide."

An outbreak of hostilities and the possible loss of Iraqi oil on world markets could cause further gasoline price spikes, Thorp said.

Already, there were indications yesterday that prices may have risen beyond the levels in the latest UCAN and auto club surveys.

Some Chevron and Unocal 76 stations in San Diego yesterday were charging $1.87 a gallon for regular, while some Arcos – usually the low-price brand in California – were selling fuel for $1.77.

Gas at membership warehouse Costco was going for $1.67.

Independent dealers, who typically help stabilize prices in the market with relatively low prices, complained yesterday that they are getting squeezed as surplus fuel supplies dwindle from the 10 corporate-owned refineries in the state.

Joe Balistrieri, owner of North Park Service Center, said his cost for a gallon of unleaded regular jumped from $1.04 on Jan. 28 to $1.16 yesterday.

He nevertheless is trying to hold his pump price at $1.69 a gallon to compete with surrounding corporate-owned stations.

"When taxes are figured in, I'm making only about 4 cents a gallon right now," Balistrieri said. "I've had to bite the bullet."

Oil industry executives yesterday said a gallon of gasoline – even at current prices – still costs consumers less than a gallon of bottled water. When inflation is factored in, gasoline costs about the same as it did 30 years ago.

However, San Diego County motorists continue to pay far-higher prices than their counterparts nationwide.

The U.S. Energy Department said this week that the average price of regular gas climbed by 5.4 cents in the last week, to $1.53 – 18 cents or so less than the average price here.

Oil companies have long contended that San Diegans pay more at the pump because of the relatively small number of local stations per capita and the high cost of doing business in the area, among other factors.

U.S. crude-oil prices will average $32.36 a barrel this year, up 24 percent from last year, as inventories stay below normal levels and the nation prepares for a possible military assault on Iraq, the Energy Department said yesterday.

The department raised its estimate for U.S. crude-oil prices by 5.8 percent from last month's forecast.

Venezuelan crude-oil production, which has been curbed by a strike, is estimated at about 1.4 million barrels a day in February, up from last month's forecast of 1 million barrels a day, the department said.

Venezuela was producing about 3 million barrels a day before the strike began Dec. 2.

The department said it will take several months for production to return to pre-strike levels.

Global spare capacity is estimated at about 2 million barrels a day as the Organization of Petroleum Exporting Countries ramps up production by 1.5 million barrels a day in March, as agreed at its meeting last month, the Energy Department said.

Oil inventory levels held by member countries of the Organization for Economic Cooperation and Development could reach five-year lows by spring, the department said.