U.S. suppliers of service station pricing numeral signage have confirmed that oil companies have started stocking up on "3's" to use in signage at their gas stations, according to Platts Oilgram News. Specifically, they are buying a "3 point," or the larger font used to denote 3 dollars, followed by a decimal. U.S. retail gasoline prices have never before reached the $3 level. Sales and interest in 3 points were confirmed this week by two big U.S. suppliers of service station pricing numerals. "Unfortunately, that's so. We've already sold some," said Guy Barnes, president of Fast-Ad in Santa Ana, California. Barnes said a mix of majors and independents have either bought or are looking to buy 3 points. "Definitely some remote areas are planning to go to $3 a gallon," he said, citing cities like Barstow, Calif., where "you're kind of a captive audience." Barstow is located halfway between Los Angeles and Las Vegas. A national sales manager at Wagner Zip-Change said his company "has had inquiries regarding 3 points and is in the process of quoting them for (some) major oil companies." Retail gasoline prices in California shot over $2 a gallon recently on fears of supply shortages and bottlenecks this summer, but $3 has yet to be seen. "We're getting a run on 2s, that's for sure," said the Wagner employee. Exactly who is readying to make the move to $3 a gallon gasoline? "Shell and Chevron both said they anticipate (gasoline prices) being over $3 (and to) make sure you have 3s," said Redwood City, Calif.-based Bob Oyster, owner of 26 stations (both Shell and Chevron brands). But Chevron denied telling its dealers to stock up, saying the company doesn't have any 3 points in stock or on order. As for Shell, "there has been no directive to dealers" regarding use of the number 3 at service stations, said a spokeswoman for Equilon, Shell's downstream subsidiary. The gasoline market is particularly skittish these days. Analysts say low inventories make price spikes inevitable if there are supply disruptions. Gasoline prices on the New York Mercantile Exchange broke through Gulf War highs last week when a fire knocked out a coking unit at Tosco's refinery complex near Los Angeles. While $3 a gallon may still be a way off, the average price of California premium retail gasoline has jumped above $2 a gallon for the first time in seven months. For the week ending April 30, premium unleaded gasoline prices averaged $2.058/gallon, midgrade moved to $1.961/gallon and regular was $1.867/gallon, the California Energy Commission said. There was more news on the gasoline supply front April 30: Tosco said a fire at its 286,000 barrels per day Wood River, Ill., refinery knocked out a 100,000 barrels per day crude unit there. Both Tosco outages are in particularly sensitive areas that rely on limited supplies of boutique fuels. California has a state-mandated CARB gasoline, while major cities in the Midwest must move to a summertime reformulated blend. Meanwhile, several refiners have hiked their 2001 earnings forecasts due to tight supplies of RFG and the anticipated run-up in prices. But while refiners may be able to cash in on higher gasoline prices, that's not the case for petroleum marketers. Gasoline at $3/gallon "is not good news. Marketers never do well as prices go up," said Dan Gilligan, president of the Petroleum Marketers Association of America. The move will create "hiccups" in the credit system, he said, explaining marketers must pay a fee of about 3 percent when a motorist chooses the use their credit card to pay at the pump. "At $2, many marketers last summer had their banks inquiring about credit," said Gilligan, noting "there's really a windfall to the Visa and Mastercard processors on this." As for dealers like Oyster who are stocking up on 3's, "it's the oil companies that are raising their prices," he said, defending hikes in the street price of gasoline. "It's not us, we're just a little guy that runs a service station out here." The head of a large West Coast retail association had only one thing to say when told companies were readying for $3/gallon gasoline: "My God!" About Platts Platts, the energy market information division of The McGraw-Hill Companies, bills itself as "the world's largest and most authoritative provider of energy market information." The company has more than 325 professionals worldwide and products ranging from real-time and Internet-based news services, to market reports, databases, magazines and conferences. Platts services cover the oil, petrochemical, natural gas, electricity, nuclear power, coal, bandwidth and metals markets. Every day more than $10 billion of trading activity and term contract sales are based on Platts' price assessments. Additional information is available at www.platts.com.
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