Arco's error puts temporary crimp in local gas supply

www.signonsandiego.com By Frank Green  UNION-TRIBUNE STAFF WRITER

March 14, 2003

San Diego County's short, pricey gasoline supply just got tighter.

Arco said it stopped selling unleaded regular on Wednesday at 59 of its 120 or so stations in the region after equipment at a local terminal failed to mix the additive ethanol in 420,000 gallons of gas.

Federal and state laws require a 5.75 percent level of the cleaner-burning additive in fuel sold in California.

The Los Angeles company said it delivered the ethanol-less gas to the stations before the malfunction was discovered. Arco then dispatched tanker trucks to retrieve the fuel, leaving some stations without any unleaded regular for as long as three days.

The amount of gas involved is enough to fill 28,000 15-gallon gas tanks.

"We contracted with virtually all the pump trucks in Southern California to pump the gas out of service station tanks," said BP Arco spokesman Daniel Cummings.

Cummings characterized the shortage as minor, adding that all of the affected Arco stations would again be selling unleaded regular by tonight.

By noon yesterday, 46 Arco stations were waiting to have their tanks refilled with reformulated fuel, Cummings said.

Consumer activists who follow the gasoline crisis in California said it appeared Arco was acting responsibly in trying not to ignite panic buying by motorists.

But Charles Langley, who manages the gasoline project for the Utility Consumers' Action Network, stressed that a supply glitch of as little as 3 percent has in the past caused prices to spike by as much as 30 cents a gallon.

UCAN said Tuesday that the average price for a gallon of unleaded regular was $2.14 a gallon, up 7 cents from last Friday.

Statewide, prices reached $2.127 a gallon this week, according to the American Automobile Association. Prices in San Francisco reached a record $2.251 yesterday. The nationwide average is $1.708.

Soaring prices largely reflect shrinking crude-oil supplies, analysts said.

Crude stocks have fallen near 28-year lows after a nationwide strike in Venezuela slashed shipments from the world's fifth-largest oil exporter.

The prospect that a U.S. war against Iraq could disrupt oil shipments from the Persian Gulf have also fueled a surge in the cost of oil, helping send crude prices to 12-year highs this week.

Meanwhile, Gov. Gray Davis said yesterday that oil companies may be manipulating gasoline supplies to cause record-high prices in California and gouge consumers

Recent "unexplained" surges in pump prices may be the result of a "deliberate withholding of supply" by oil companies, Davis said in letters to the state's energy and public utilities regulators.

"As we well know from past experience, many energy companies would rather use Enron-style tricks to fuel their bottom lines, than to fuel California homes and businesses," Davis said in the letter.

Energy companies "have no qualms about using world events, such as the Venezuelan oil strike and an unusually cold winter on the East Coast, to their advantage," Davis said. "In light of a possible war with Iraq, I hope that none of these companies are engaging in war profiteering or any other types of illegal activity."

The supply shortage at local Arco stations this week have only added to motorists' frustrations with spiraling prices.

Arco's Cummings said some of the company's local franchisees were accommodating customers by offering higher-grade fuel at unleaded regular prices.

"We apologize to customers who were inconvenienced" by the shortage, Cummings said.

Frank Green: (619) 293-1233; frank.green@uniontrib.com