Pump prices rise as supply of gasoline is cut back

By Kristina Shevory
Seattle Times Eastside business reporter

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And there's nothing he can do about it.

"We've run out of gas, and no one is delivering," said Best, who runs Yarrow Bay Shell. "We're dead in the water now. All my customers are unhappy, and the frustrating part is I don't know whether I'm going to get (gas) or when. You can't run a business this way."

Shell, which owns and supplies Best's station, cut by 20 percent the amount of gasoline it supplies to its stations. The oil giant says it limited supplies because of last week's cold snap and small fires at its Anacortes refinery Jan. 5.

Refinery fires happen four to seven times a year and wouldn't restrict gas supplies if the major oil companies kept gasoline in reserve, said Tim Hamilton, executive director of AUTO, a trade group of 500 gas-station dealers in Washington.

"Oil companies intentionally keep supplies low to keep prices high," he said. "When a refinery goes offline, they raise prices to keep consumption low. Dealers are helpless to do anything."

A Shell Oil Products spokesman said the limits, called allocations, were lifted yesterday, but Best and other Shell and Texaco dealers say the company hadn't told them. Shell provides gasoline to Texaco stations.

"We're running extra trucks ... to make up the difference, but there will be a time difference depending on the availability of carriers," said Cameron Smyth, Shell's West Coast spokesman.

When delivery limits are lifted, it usually takes about a week before supplies are back to normal and operators can lower prices.

Hamilton, however, expects gas prices to remain high into the spring because refineries don't have extra supplies and haven't returned to full production.

Over the past two weeks, Best has raised prices 15 cents to $1.79 a gallon for regular unleaded, $1.89 for plus, and $1.99 for premium.

He isn't alone. Prices are up around the Northwest, from Spokane to Bellingham to Portland, as supplies from the Shell refinery in Anacortes dropped and demand remained high. Many dealers have increased prices by 15 to 20 cents a gallon, and some say they don't expect prices to drop soon.

"Customers have been putting less gas in their cars, but I keep telling them to stock up before prices go up," said Thomas Lee, owner of the Shell Stadium Market in Seattle, which raised prices 15 cents in two weeks. "I'm expecting more increases in price. The last time we were on allocation, our regular gas was $2.09, and we may be headed that way again."

Not all gas stations in the area have been hit with restricted supplies and price increases. At Chevron and Arco stations, it's business as usual. "I can order as much as I want as long as I have customers," said Thomas Chen, operator of C+C Arco in Federal Way.

At most 76 stations, supplies have remained the same, but prices have gone up. At AVS Gas and Groceries in Mill Creek, Rita Chavra has increased prices for regular unleaded from $1.52 to $1.67 in the past few weeks.

The difference in suppliers has led gasoline prices to fluctuate around the region. The Seattle-Bellevue-Everett area averages $1.64 for a gallon of regular unleaded gas, up 11 cents in the past month, AAA says. The highest recent price was $1.96 a gallon for regular unleaded, the group says.

Lifting the allocation should lower prices and improve supplies, but until then some dealers will have less gas to sell.

"I got short-loaded today for the first time," said Bryan Wyrsch, whose prices at the Mount Si Texaco in North Bend have increased 20 cents in two weeks to $1.82 a gallon for regular unleaded. "I ordered 9,600 gallons of regular unleaded and only got 5,400 gallons yesterday.

"They've been saying that (in the middle of the month), allocations would end, but nothing has been done so far. And it's getting worse."

Kristina Shevory: 206-464-2039 or kshevory@seattletimes.com

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