September 1, 2000 - Oil Companies Raise Gas Prices

FOR IMMEDIATE RELEASE: September 1, 2000 CONTACT: Will Woods (714) 734-1801

Oil Companies Raise Gas Prices for Labor Day!

According to reports from the Oil Price Information Service (OPIS), the spot market (large bulk cargoes) for regular unleaded in LA reached $1.43 yesterday morning. AuTO-CA believes the price spike is the direct result of oil companies intentionally reducing production and lowering inventory levels to the point where prices spike upwards. Perhaps best described as a self-created shortage, the supply situation in California is similar to the Midwest earlier this year when the oil companies jumped pump prices over $2 per gallon.

While it is uncertain how much of the spot market spike will find its way to the street, service station dealers in LA are reporting wholesale increases imposed by the oil companies of 15¢ per gallon over the last few days. Using the $1.43 as a base acquisition cost, add 47¢ tax with 3¢ for terminaling and delivery to the station and one gets $1.93. The $2.00 pump threshold is hit with a 7¢ retail margin.

While it is too early to say for certain how many of the pump prices in CA will pull up to the "spot", AuTO-CA believes California motorists should not be surprised to see over $2 per gallon on stations for Midgrade and Super by the end of the Labor Day Weekend. If the oil companies do not back off the current price spike by lowering prices fairly soon and increase production at California refineries, pump prices above the $2.00 benchmark could become very common throughout CA.

AuTO-CA believes the current price increases are simply a case of the oil companies taking advantage of holiday travelers during the last major summer holiday. The increases can not be blamed on actions by OPEC, higher crude oil prices, or any other known cost of doing business. Simply put, the higher prices are nearly pure increases in profit for the oil companies and the unfortunate service station dealers caught in the middle are helpless to object.

AuTO-CA continues its call to the California Attorney General and elected members of the state legislature to support legislation that will increase competition within the refinery ranks and prevent gouging by oil companies. In the meantime, AuTO-CA asks the public to remember it is not the dealers and their employees who are taking their money in this fashion. Rather, the price increases are the result of actions taken by executives of oil companies to pump up their profits with artificially high prices at the pump on Labor Day.

AuTO-CA represents over 600 independently-owned service station dealers, auto repair shops, car washes and convenience stores throughout the state. Our members are not the major oil companies; we are small business owners.

Should you have questions regarding this correspondence or other materials you receive related to the oil industry, please don't hesitate to contact Will L. Woods, CAE, Executive Director, at the AuTO-CA office, 714.734.1801.