Tosco Increases Wholesale Gasoline Prices in West
Tosco Corp., in an effort to boost lackluster retail gasoline profits, has begun raising wholesale gasoline prices in Southern California and Arizona, two markets where it has significant market share.</br></br>Service-station dealers in California and Arizona say that since March 26, Tosco has raised wholesale prices to its dealers that market under such brands as 76 and Circle K by between six cents and 16 cents a gallon, depending on the area. As a result, dealers say they are paying substantially more than their competitors for gasoline, forcing them to either boost retail prices or sustain losses.</br></br>It isn't clear how long Tosco will hold out, however, if competitors like Exxon Mobil Corp. and Chevron Corp. don't match the increases. "We will pursue every business practice the market will allow us to do. If the market doesn't allow us to do something, we can't do it," said Jefferson Allen, Tosco's president and chief financial officer.</br></br>Tosco, a refining and marketing company based in Old Greenwich, Conn., agreed in February to be acquired by Phillips Petroleum Co. for about $7 billion, and shareholders of both companies yesterday approved that deal. Although Tosco posted record profit from refining operations in the fourth quarter, much of that achieved in California, the company says marketing income has sagged.</br></br>So far, competitors haven't matched the price increases, but Tosco dealers and others in Arizona and Southern California believe they must be tempted. Gasoline spot prices, or the wholesale prices paid in the daily spot market for gasoline at the refinery, have been soaring in the states, and Tosco says it has lost money from marketing operations in the region for nine months. Gas stations have been unable to push through price increases in the fiercely competitive market.