Crude oil futures dropped marginally Tuesday, going downhill against bullish news about a hardening public posture by Saudi Arabia on the Persian Gulf crisis and more tough talk from President Bush.
December crude oil futures ended at $29.37 a barrel, down $1.04. January crude finished at $28.24, down 71 cents. Traders said the market was consolidating after plunging $5.41 a barrel Monday on peace hopes.
At the same time, Amoco Corp. decreased wholesale gasoline prices to dealers nationwide by an average 1.25 cents a gallon, but gasoline station operators in the Chicago area mostly said decreases here were too small to make them change their prices to consumers. Those decreases amounted to a 1-cent drop in Chicago, and a half-cent drop in the suburbs.
Throughout its 30-state marketing area, Amoco dropped wholesale diesel and home heating oil prices by an average 5.3 cents a gallon. The biggest drop in the price of gasoline was 5 cents a gallon in Richmond, Va., and Charleston, S.C., and in heating oil and diesel fuel 6 cents in Chicago.
”Our price moves today reflect competitive pressures and lower crude oil costs,” said Robert J. Rauscher, Amoco Oil Co.`s marketing vice president.
Joe Lejcar, the leaser of Joe`s Amoco II in Alsip, said Tuesday he had no intention of dropping his prices as a result of Amoco`s half-cent lower wholesale price.
”The independents down the block went down 5 cents at the pump already,” he said with disgust. ”But at least Amoco took their sweet time going up. Down at the Speedway, it went from 95 cents to $1.43 in about two weeks.
”Dropping it a cent would cost me about $450 a month in profit,” he said. ”But if they go down again, I`ll drop it. If they went a penny, I`d go a penny right away.”
Bill Prohas, manager of Abbott`s Amoco in Matteson, said he hadn`t heard about the drop in wholesale prices but said, ”We`ve been kind of expecting it.”
”The public is aggravated,” Prohas said. ”They yell at us. They know we`re not the culprits, we`re just glorified cashiers for the gas industry. But they still yell.”
Oil company analysts said they do not expect major drops in oil prices around the country, partly because the crude oil price remains volatile and partly because oil companies have passed along only about 25 cents of the roughly 50 cents a gallon price hike they have paid for some oil since Iraq`s Aug. 2 invasion of Kuwait.
”When crude oil comes down $10 a barrel, the oil companies certainly feel pressure (to cut prices),” said Frank Knuettel, chief financial analyst for Prudential-Bache Securities. ”But I wouldn`t expect gasoline prices to follow crude oil prices down, simply because they never came up as much.”
Shell Oil Co. reported Tuesday it earned $227 million in the third quarter of 1990, a decrease of $113 million, or 33 percent, from the year-earlier quarter.
”It is ironic that at the time the public perceived the oil industry was profiteering and price gouging, our oil products business lost $64 million in net income in the two months following the Iraqi invasion of Kuwait,” said President Frank H. Richardson.
Meanwhile, Saudi Arabia appeared to pull back from conciliatory comments by Defense Minister Prince Sultan, who indicated Sunday a willingness to concede Kuwaiti territory to bring about a peaceful settlement with Iraq.
The Saudi ambassador to the U.S., Prince Bandar, whose father is Prince Sultan, was called to the State Department to explain the Saudi position. He denied that his kingdom will accept anything less than a complete Iraqi withdrawal from Kuwait.
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Bush, campaigning for Republican candidates in New England, had more harsh words for Iraq`s Saddam Hussein, comparing the invasion of Kuwait to Hitler`s occupation of Poland.