Phillips Petroleum Co. cut its wholesale gasoline prices yesterday, and Atlantic Richfield Co. said it would freeze its prices for at least a week, after President Bush admonished oil companies to show restraint in raising prices as a result of the crisis in the Mideast.
The actions -- the first break in a steady rise of gasoline prices in the past week -- were not immediately matched by other major oil companies. Most of them said they supported the president's call for restraint but were being pressured by market forces to raise their prices. And an industry group said retail gasoline prices had not increased nearly as much as the cost of crude oil in the past week.
President Bush's statement, made during his speech yesterday morning announcing that American forces were being sent to protect Saudi Arabia from Iraqi forces in Kuwait, moved the recent grumbling about gasoline prices from the corner filling station to the White House.
"I'm asking the oil companies to do their fair share," the president said. "They should show restraint and not abuse today's uncertainties to raise prices."
Phillips's price cut, of as much as 4 1/2 cents a gallon, and Arco's freeze came as crude oil prices dropped for the first time in a week after reaching a 4 1/2-year high that was nearly double their level of a few weeks ago.
The price of a benchmark barrel of crude oil fell $2.35 on the New York Mercantile Exchange yesterday to $25.96 a barrel. Analysts said the decline appeared to be a reaction to the U.S. military buildup in Saudi Arabia and reports that the Saudis and other members of the Organization of Petroleum Exporting Countries would increase oil output to make up for much of the nearly 5 million barrels a day lost when Kuwaiti production stopped and Iraqi oil was embargoed.
Many oil industry executives said the decline in crude prices was not likely to translate into immediate declines at the gasoline pump, mostly because the last couple of dollars of crude price increases had not yet been passed along to consumers.
However, Phillips Chairman C.J. Silas said the Bartlesville, Okla.-based company was cutting its prices by varying amounts around the nation to "reflect what's occurring in the petroleum markets. The company has not charged unreasonable prices for its gasoline."
Phillips, which had raised its wholesale gasoline price by 20.6 cents since last Wednesday, said it would continue to evaluate its prices daily.
Phillips's announcement late yesterday followed on the heels of Arco's decision to freeze its prices.
Noting that it had increased wholesale prices just 4 cents since last week -- well below the industry average -- Arco said it would not raise its prices at the end of its one-week freeze "unless we are substantially below the general market."
"We think that President Bush's actions are the right actions. He's asked for help and we've done what we can to help," said George Babikian, president of Arco Products Inc., the Los Angeles-based oil company's refining and marketing arm.
Officials at the company, which has become the West Coast's largest gasoline seller by undercutting most other major brands by a few cents a gallon, insisted that their price-freeze decision was not a marketing gambit, and they said they would not hesitate to raise prices if they found themselves considerably below the market at the end of a week. The company also said it would cut its prices during the freeze if conditions warranted.
Most other oil companies responded to Bush's statement by insisting that they had not increased prices unfairly. "While we have raised prices, to date we have recovered only a fraction of the higher costs incurred," Mobil Corp. Chairman Allen E. Murray said in a telegram to Bush that reflected the language used in statements by several other oil companies. "Please be assured that in this time of crisis Mobil will do its fair share."
Rancor over the rapid increase in gasoline prices has been growing as fast as the prices themselves in recent days, and several politicians and consumer advocates have charged that oil companies had taken advantage of the Mideast situation to unfairly jack up prices to consumers.
Yesterday, the American Automobile Association reported that the average retail price for self-serve regular unleaded gasoline had gone up 16.2 cents since last Wednesday, the day before the Iraqi invasion of Kuwait, to $1.237 a gallon.
To support the industry's contention that it had not raised its prices unfairly, the American Petroleum Institute, a trade group, released figures yesterday showing that, as of Tuesday, gasoline prices had gone up 12 cents a gallon in the past week, while spot market crude oil prices were up 20 cents a gallon.
"We think that what these figures show is that ... the price has not been raised as much as the spot market has gone up," API President Charles J. DiBona said. He spoke before the release of the latest AAA figures and the close of the oil futures market, which narrowed the gap between the two figures considerably.
"I think it's perfectly appropriate for the president to call for restraint in a situation like this, and I'm sure the industry has responded with restraint," said John R. Hall, chairman of Ashland Oil Inc., the nation's largest independent gasoline refiner.
"We support his call for restraint on the product prices; however, when our crude oil costs go up, we have to ultimately recover those costs in the marketplace, or we're going to go out of business."