Motorists to See Hike in Gas Prices

Gasoline prices, now the cheapest in years for Southern California drivers, are likely to rise by 15 to 20 cents a gallon at the pump over the next few weeks and in some cases are climbing already, analysts said Friday.

Production cutbacks at California refineries and an apparent rise in demand for gasoline are behind the expected increase, analysts said. And crude oil prices moved up to a two-month high Friday, to $21.62 a barrel on the New York Mercantile Exchange.

“I don’t think we’ll see prices this low again for quite some time,” said Fred Rozell, retail pricing director for Oil Price Information Service, a Lakewood, N.J.-based firm.

Rozell said wholesale prices for gasoline already have jumped about 15 cents a gallon in California since mid-December, but those increases haven’t yet been passed along to consumers. The result, he said, is that many owners of independent gasoline stations in the area are selling gasoline at a loss.

“You can’t operate that way, losing money, or you’ll go out of business, even if you are [making money] selling Cheetos and other stuff,” Rozell said.

The Automobile Club of Southern California reported that the average price in Los Angeles County for a gallon of gasoline hit 99.2 cents Friday. That’s down from a high of just under $2.04 a gallon in May. It marked the 16th straight week prices have fallen.

Likewise, prices for the 13-county Southern California region extending from San Luis Obispo south to the Mexican border fell to an average of just under $1.08, down from a high of $2.01 in June. The auto club said these are the lowest prices for gasoline over the five years the organization has kept such records.

Jeffrey Spring, an auto club spokesman, agreed that rising prices in the spot market for oil and in gasoline at the wholesale level suggest that prices at the pump “are at or near the bottom.”

Spring said he has already seen prices going up at some stations in his area near Yorba Linda, but the average is still down.

The anticipated rise in gasoline prices would eliminate a bonanza for the local economy. Analysts say that the money consumers saved on cheap gasoline has freed up money for spending on other goods and services.

“The month of December was great. Prices were going down. I thought finally, gas is under a dollar,” said Benny Rubacava, a school bus driver from Mission Hills.

But at the Arco station where he was filling his minivan’s tank Friday night, gas prices had risen 6 cents a gallon that morning. Rubacava said he will curb weekend road trips if prices climb higher.

Rozell said even after the recent rise in wholesale prices is passed on to consumers, other factors probably will push up prices further.

He said prices climb nearly every February when retailers in Southern California switch from winter-grade to summer-grade gasolines, which are more expensive to produce. Then, later in the spring, prices normally are hiked further as vacationers hit the road.

Rozell said Southern California was the least profitable gasoline market in the nation for owners of independent gasoline stations, according to a new ranking by his firm. He said competition from retailers such as Costco Wholesale Corp. has fueled the price-cutting.

For independent gas station owners, who must buy their gas at higher prices from independent refineries, the last few months have been particularly tough.

“For the past month and a half, we have been losing money--close to 15 to 20 cents a gallon,” said Gary Tejwani, owner of the Slauson Gas Mart on West Slauson Avenue. “In order to compete with the big boys, sometimes the market goes upside down and the independents suffer.”

Tejwani’s pump price Friday for regular unleaded was 99 cents, but he anticipated a boost soon, as larger competitors also hike prices.

“I’m going to be losing less, or hopefully start making some money,” said Tejwani, adding that the last year has been the toughest in many years.

Some franchise stations are already raising prices.

At Tony’s Gas Service on North Highland Avenue, a Mobil franchise, prices were increased 6 cents Friday morning, said manager Joe Shubat, with regular unleaded up to $1.05. If they hadn’t, Shubat said, Tony’s would have lost 1 to 2 cents a gallon on credit card transactions, where there are added costs.