Local gas stations squeezed by supply shortages, high prices

jhickey@thetribunenews.comOctober 4, 2012 

Conserv Fuel, next to Santa Rosa Park in San Luis Obispo, has the gas pumps closed and no prices posted.

DAVID MIDDLECAMP — dmiddlecamp@thetribunenews.com

Shortages in gasoline supplies have driven wholesale prices to record highs in California, and now independent gas vendors in San Luis Obispo County are feeling the squeeze. One has even stopped selling to customers.

Rocky Garber, manager of the Conserv Fuel location on Santa Rosa Street in San Luis Obispo, said his pumps have been roped off since Tuesday. He’ll start selling gas again “as soon as the prices go down,” he said on Thursday. “The majors can get gas, but for the independents it’s harder to get. We have to make at least a couple cents per gallon, but we can’t sell gas for $6 a gallon. No one will buy it.”

Garber is keeping open the convenience store, which has a Subway sandwich counter.

The Auto Club’s Fuel Gauge Report, which typically has a day lag time, lists the current price of fuel for the San Luis Obispo-Atascadero-Paso Robles area as $4.405, compared with $4.212 a week ago. A clerk at Valero in Arroyo Grande, who declined to give his name, said that prices there have jumped 30 to 50 cents in one week, depending on grade.

Jay McKeeman, a spokesman for California Independent Oil Marketers Association, a Sacramento-based group that represents wholesale and retail fuel marketers, told Bloomberg News that independent gas station owners are typically the first to run out of fuel and shut their pumps when spot prices surge because they often lack long-term contracts to buy from suppliers at set prices.

But while all local independent stations are seeing prices rise, some are keeping their pumps open.

Saleem Pattell, who owns University Gas on Grand Avenue in San Luis Obispo, said that to keep customers, he will never shut pumps. On Thursday morning, his profit margin was 15 cents per gallon, but by the afternoon it was 7 cents. “The price will go up or the margin will go down, but I will keep the station open no matter what, even if it means I lose money. I am not a seasonal businessman.”

A clerk at Lucky 7 in Morro Bay said the pumps are still open, “for now.” Cayucos Gas Mini Mart’s pumps were also operating Thursday.

Gasoline at the pump rose 8.3 cents to $4.315 a gallon in California on Wednesday, according to AAA.com, 53.1 cents more than the national average of $3.784.

Costco’s outlet in Simi Valley, 40 miles northwest of Los Angeles, ran out of regular gasoline Wednesday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, told Bloomberg News. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said.

The San Luis Obispo Costco’s pumps were on Thursday, and a corporate representative was unavailable for immediate comment about whether shut-offs were expected.

A Chevron Corp. oil pipeline shut down last month, an Oct. 1 power failure at Exxon Mobil Corp.’s Torrance refinery and units down at other plants have cut supplies in the market.

Bob van der Valk, an independent petroleum industry analyst in Terry, Montana, said in an email to Bloomberg News that the price surge is a “a short-term problem.” Wholesale costs should start falling as Exxon’s refinery returns to normal operations and other plants finish maintenance.

Bloomberg News contributed to this report.

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