Low price gas station

The price gap between regular and premium unleaded gasoline traditionally narrows when costs surge, but the latest hike has been bucking that trend, leaving consumers feeling a record pinch across the board.

The price-per-gallon differential between regular and premium unleaded gas in the Los Angeles metro area widened to 18 cents on Aug. 27, up from 14 cents on July 27, according to Oil Price Information Service, a Rockville, Md.-based gas price tracking service.

"I can't recall seeing this before," said Jeffrey Spring, a spokesman for the Automobile Club of Southern California. "It's absolutely amazing to me."

There's no lack of explanations for the overall jump in gasoline prices. These include refinery shutdowns, a raptured pipeline, and the massive blackout back East. Another complication: this is happening during the summer months when demand for gasoline traditionally peaks.

But the recent gap between regular and premium is leaving even the experts scratching their heads. Typically, when prices go up, there's more demand for regular than premium because motorists want to save money. During the price hike in 2000, for example, the percentage of premium gas sold dropped to 7.8 percent nationally from 10 percent.

This time, all grades of gas are being produced and sold at roughly the same rate, creating an equal level of demand.

"In the general overall shortage in California, marketers are buying anything they can get," said Daniel Gilligan, president of the Petroleum Marketers Association of America, a trade group representing 8,000 service station owners and gas wholesalers. "Demand is at an incredible high right now. It's conceivable that gas stations are buying premium and selling it at (lower) prices."

He added: "Wholesalers and retailers are not feeling that the demand for premium is decreasing. Therefore, it is rising in a parallel fashion to the other grades of gasoline. California is in such a tight supply-demand balance that these type of events create volatility in the marketplace."

Regular and premium unleaded gas in L.A. averaged $2.13 and $2.31 per gallon, respectively, on Aug. 27, up from $1.69 and $1.83 a month earlier, according to OPIS.

Even with no letdown in premium prices, station owners say they are feeling the pinch.

They have made an average 10-cent profit per gallon over the past three years, said Fred Rozell, director of retail pricing for OPIS. Now, they are virtually at the break-even point.

Stations need to keep their prices as low as possible to draw customers into their convenience stores, where profit margins are higher. "They have to be conscientious of what the competition is doing," said Rozell. "If they move their retail prices too quickly, they will lose volume on the inside sales."

That holds particularly true in Los Angeles County, which has 2,200 gas outlets.

"Even in normal times, refineries are running at 95 to 100 percent capacity to meet the summer demand for gasoline," said Ron Planting, an analyst for the American Petroleum Institute. "If supplies are tight for gasoline, it would affect the supplies for all grades."