Consumer Confidential: Recovery, video games, Exxon

Here's your thrilling Thursday roundup of consumer news from around the Web:

--The economy's on the upswing. Jobs, not so much. All eyes are now fixed on whether consumers will keep spending into next year, pushing corporate profits higher and maybe, just maybe, prompting one or two employers to start hiring again. I'm thinking that since the cash for clunkers program was such a boon to the auto industry, how about cash-for-pretty-much-every-other-big-thing? I'm sure there are lots of appliances and beds and other stuff that people would be more than happy to replace, if the price was right. Just saying.

--Despite the fact that my family finally took the plunge and bought a Wii this year, committing us to a never-ending cycle of splurging on new games, our friends at Nintendo say their profit fell by more than 50% since April. The main reason: Wii sales are on the wane. I'll cut you a deal, guys. Slash your game prices and I'll buy everything with "Mario" in the title. A win-win for us both.

--Exxon Mobil says its profit fell by 68% in the most recent quarter as oil prices came down. Man, that just breaks my heart. Last year, lest we forget, the oil giant pocketed the biggest wad in U.S. corporate history -- more than $45 billion.

-- David Lazarus

Gasoline prices are set to rise as refinery production is greatly reduced

Gasoline prices slowed their decline in California and jumped by 10 cents nationwide as oil companies continued to reduce the amount of fuel that they are refining.

The average price of a gallon of regular gasoline in California fell just 0.3 cents to $2.985. It was the sixth straight week of declines in the state but also the smallest drop since 2009’s record high was reached Sept. 14. Nationally, prices rose 10 cents to an average of $2.674 a gallon.

Oil industry analyst Patrick DeHaan said that refineries around the nation have greaty cut back in an effort to raise prices at a time when they claim their profit margins are very low. Refiners typically do cut back production in the fall, said DeHaan, senior petroleum analyst for GasBuddy.com, but oil companies are processing less oil now than at any time since September 2008, when Hurricane Ike knocked out several facilities in the Gulf of Mexico.

“Demand has remained the same, but the supply is dropping,” he said. “Two weeks ago, Americans used 220 million more gallons of gasoline than was produced that week. Last week, consumption was 96 million gallon more than what was produced. That has the bulls running and prices rising.”

Meanwhile, crude oil futures for December delivery were down $1.82, or 2.26%, at $78.68 a barrel on the New York Mercantile Exchange.

Phil Flynn, an energy analyst with PFGBest in Chicago, said that there were a number of factors in the drop, including some profit-taking after oil last week broke out of a several-weeks-long trading range of $65 a barrel to $75 a barrel.

“There were more concerns about the economy today and the dollar got a bit of a boost against foreign currencies. When the dollar is stronger, investors are less likely to flee it and go into commodities like oil,” Flynn said.

-- Ronald D. White

Consumer Confidential: Baby Einstein, gas prices and newspapers

Here's your make-my-Monday roundup of consumer news from around the Web:

--Turns out playing "Baby Einstein" videos for your toddler isn't so smart after all. So Disney is offering refunds to anyone who bought one of the videos between June 2004 and September 2009. Some parents and consumer advocates have been saying for years that the DVDs are little more than marketing tools that target babies and play no demonstrable role in improving cognitive skills. A Disney official blasted such criticism as "extreme." Nevertheless, the company is doing the right thing by letting parents off the hook.

--Like you needed something else to worry about: Retail gas prices are on the rise, raising fears that higher costs at the pump will slow the economic recovery this holiday season. The average gas price nationwide is up 20 cents over the last couple of weeks to $2.671 a gallon. That matches the peak set during the summer driving season, indicating that rising oil prices will keep pushing pump prices northward.

--There may never have been greater demand for information, but it's clear that fewer and fewer people want it from (ahem) newspapers. The Audit Bureau of Circulations says the average daily circulation of newspapers dropped by another 10.6% in the April-September period -- more than twice the decline of the same period last year. Consumer-themed blogs, meanwhile, showed surprising growth and vitality, raising the likelihood that the people who write daily roundups are in line for fabulous bonuses and raises. I wish.

-- David Lazarus

Consumer Confidential: College, gas and Apple

Here's your tantalizing-Tuesday roundup of consumer news from around the Web:

--College costs are higher than ever. That's the word from the College Board, which says tuition and fees at private four-year schools have risen 4.4% to $26,273, while charges at public four-year universities climbed more than 6% for both in-state and out-of state students to $7,020 and $18,548, respectively. This year's high school graduating class was the largest ever, creating a seller's market for colleges. Not surprisingly, schools are pressing that advantage. Also not surprisingly, the experts say students and families will be borrowing more to make higher education possible.

--Oil is up, and you know what that means: You'll be paying more at the pump for gas. Oil briefly topped $80 a barrel this morning, the first time that's happened in a year. The price of a gallon of gas now averages $2.577 nationwide, up almost a dime from a week ago, according to our friends at AAA. I'm thinking the real coup here would be to open a college that also sells gas.

--Apple's stock took off after the company reported record quarterly sales of iPhones and Mac computers. If you're like me, you're asking only one question: Why didn't I invest in this company before it became so darned successful?

-- David Lazarus

With oil nearing $80 for the weakest of reasons, better fill up now

Until today, pump price expert Fred Rozell figured that California gasoline was headed down to $2.85 a gallon or lower. But that was before crude oil futures for November delivery rose $1.08, or 1.3%, to settle at $79.61 on the New York Mercantile Exchange -- its highest close in more than a year.

Now Rozell says all bets are off in spite of several fundamentals, such as the fact that oil supplies are plentiful, demand remains weak and refiners have slashed production because motorists aren't driving enough to allow gasoline makers much of a profit.

"You would think that this would drive the price of crude down, but what we have here is more of a financial play than market fundamentals. There is no reason for oil to be this high," said Rozell, retail pricing director of the Oil Price Information Service in New Jersey. He added that the 10-week price slide that finally drove California gasoline back below $3 a gallon was probably over.

"If crude prices keep moving forward, the decline is going to stop," Rozell said.

Over the last week, the average price of a gallon of regular gasoline in California fell 2.7 cents to $2.998, the Energy Department said. California's average hadn't been below $3 a gallon since Aug. 3. Nationally, retail prices are already on the rise. They jumped by their highest amount since Aug. 10, climbing 8.5 cents to $2.574 a gallon.

Phil Flynn, an analyst with PFGBest in Chicago, said gasoline prices would be driven by the run-up in oil, which he said could easily reach the $80- to $85-a-barrel range. Flynn blamed the weak U.S. dollar for driving more investment money into commodities such as oil. He added that the strength of the stock market was also helping to convince skeptics that the economic recovery was underway.

That was still no justification for oil to be close to $80 a barrel, said Fadel Gheit, senior energy analyst at Oppenheimer & Co. Gheit said Wall Street speculators were again driving up the price of oil futures under the assumption that the Obama administration was juggling too many other issues, such as the war in Afghanistan and healthcare reform, to devote any serious time to pushing for tougher regulations on commodities trading.

"We still have an oil glut. We still have weak demand. More than half of the recent increase in oil is speculation and not supply-and-demand fundamentals," Gheit said. "People are brushing aside everything we learned last year from the collapse of the economy and oil prices."

-- Ronald D. White

Lower prices at the pump, but for how much longer?

Gasoline prices were down this week, but behind the scenes some economists are worried that a spike in the price of crude oil could slow the recovery.

Average pump prices in California fell for the fourth straight week, according to the Energy Department's weekly survey of filling stations. But with oil futures inching toward $75 a barrel, analysts said the retail gasoline declines may be very short-lived.

Oil futures have bounced between $65 and $75 a barrel for several months, but now it looks as though prices may soon go higher.

That would be bad news for the economy, pushing up the price of gasoline and other products at a time when consumer confidence remains weak and U.S. businesses are continuing to cut jobs, said Edward E. Leamer, director of the UCLA Anderson Forecast.

"It would be like a tax increase, more money out of the wallets and purses of American consumers, and that would tend to stunt any recovery," he said.

The average price of a gallon of regular gasoline in California fell 5.4 cents over the last week to $3.015, the Energy Department said. Motorists who were willing to shop around today could find it for as low as $2.79 a gallon at various stations in Los Angeles, Orange and Ventura counties, according to www.gasbuddy.com, a system of websites throughout the nation where volunteers report the highest and lowest prices they see.

Nationally, pump prices were already rising by an average of 2.1 cents a gallon to $2.489. Analysts and economists blamed oil markets, which they said could spike to anywhere between $80 a barrel to more than $100 a barrel in the coming days and weeks. On Tuesday, crude oil futures for November delivery rose 88 cents, or 1.2%, to $74.15 a barrel, on the New York Mercantile Exchange.

"It could go to $92 a barrel to $102 a barrel pretty easily if it crosses $75 a barrel in trading this week," said Sean Brodrick, a natural resources analyst for the investment newsletter uncommonwisdomdaily.com.

Brodrick cited several reasons for a potential spike in oil prices. He said investors were fleeing the weak U.S. dollar and pouring their money into gold, oil, silver and other commodities they think are better investment bets. Burgeoning new-car sales in China are also driving prices as first-time buyers purchase fuel for their vehicles.

And although there have been new discoveries of oil, Brodrick said, "it tends to be in very expensive places where it is difficult to find and difficult to get to," such as BP's find of a potential billion-barrel field that's thousands of feet below one of the deepest parts of the Gulf of Mexico.

John Kilduff, senior vice president of energy for MF Global, says oil traders have been willing to shrug off weak economic indicators in the U.S. in favor of international evidence of a recovery from the global recession.

"With the dollar still cratering, it looks like there could be support for oil at $80 a barrel to $85 a barrel," Kilduff said.

The increases could come in spite of a plentiful supply. Phil Flynn, energy analyst for PFG Best in Chicago, said the normal rules of supply and demand do not apply in such a volatile atmosphere. 

For consumers, that means higher prices at a time when many are still cutting back. U.S. businesses, meanwhile, are still cutting workers and aren't likely to start hiring again if cash-strapped consumers reduce spending even further to cope with high prices at the pump.

"You can’t have sustained economic growth without employment growth,” said UCLA's Leamer. Adding a spike in oil into the mix “adds to the uncertainty. People tend to postpone purchases, and it's home purchases and auto buying that is needed to power the economy going forward,” he said.

-- Ronald D. White

California motorists get a break at the pumps

California's spot gasoline market shrugged off refinery fires in Wilmington and Martinez late last week to move lower today. Retail prices around the state also fell for the second straight week as analysts were predicting a drop to about $2.75 a gallon by Oct. 12.

Talk of relief at the pump came on a day in which oil was driven higher by an improving stock market and some concerns over Iran's missile tests. Crude oil futures for November delivery rose 82 cents, or 1.2%, to $66.84 a barrel on the New York Mercantile Exchange.

The average price of a gallon of regular gasoline in California fell 4.2 cents during the last week to $3.09, which was 57.2 cents below the same week a year ago, according to the Energy Department's weekly survey of filling stations released this afternoon.

That was in spite of a lack of fresh news regarding the status of Tesoro Corp.'s Wilmington refinery, where a fire in a coking unit burned for three hours on Friday and left the facility running short of its 97,000-barrel-a-day full production levels. Tesoro officials were still assessing the damage today. A second, smaller fire occurred at a Chevron refinery in the Bay Area.

But the wholesale price for CARBOB, or California reformulated gasoline blendstock for oxygenate blending, traded between $1.89 and $1.90 a gallon today after spiking Friday to $2.04 a gallon. Part of the reason for the price decline, analysts said, was that refinery production in the state has been rising in September and climbed ahead of 2008 levels for the first time in several weeks.

During the week ended Sept. 18, California refineries made more than 6.7 million barrels of gasoline or about 1.6% more than the more than 6.6 million barrels they made a year earlier, according to the California Energy Commission's Weekly Fuels Watch Report. The 6.7 million barrels represent a 4.4% increase over the previous week. The refineries also drew down their crude oil supplies by 7.9% during the same week.

"Cooler heads prevailed on Monday," Tom Kloza, chief oil analyst for the Oil Price Information Service, said about the state's wholesale fuel markets, later adding that "you should be seeing decreases to an average of $2.75 a gallon around the state as gasoline supplies increase." Kloza also said that motorists typically travel less during the weeks after the summer driving season.

Los Angeles was still one of the most expensive places in the nation for gasoline. Among the 10 major cities tracked by the Energy Department's Energy Information Administration, only San Francisco's average of $3.13 a gallon was higher than Los Angeles' $3.10 a gallon. Houston had the cheapest at $2.22 a gallon.

Analysts weren't expecting much pressure on gasoline prices from crude oil, in spite of the fact that Iran tested missiles which Tehran says are capable of striking targets in Israel. Short of an attack on Iran to destroy its nuclear program, the current glut in world oil supplies wouldn't be affected, analysts said.

"The markets already know that Iran will always be a trouble spot," said Fadel Gheit, senior energy analyst for Oppenheimer and Co. in New York.

Phil Flynn, senior market analyst at PFG Best Research in Chicago, said, "The world doesn't need Iran's oil right now."

-- Ronald D. White

Photo: Marty Waters of Newport Beach fills up at a Chevron in Brea. Credit: Alex Gallardo / Los Angeles Times

Consumer Confidential: Gas prices, the Gap and salad safety

It's Monday. Here's your blog-o-riffic roundup of consumer news from around the Web:

--The average price of gas fell nationwide by 7 cents over the last two weeks to $2.52. The peak driving season is over, so this isn't surprising. But I'm still thinking oil (and hence gas) is going to head north as the economy gradually recovers.

--Consumers Union is voicing opposition to a proposed salad safety agreement between farmers and federal regulators. The watchdog group says the pact may be well-intended, but it amounts to industry self-regulation. And look where that got us on Wall Street.

--Is exercise bad for you? Not exactly. But some experts say baby boomers are overdoing it in the gym in their efforts to stay eternally young (or young-looking at least). That explains this sore shoulder that's been bugging me for weeks ...

--Donald Fisher, co-founder of Gap Inc., has died after a long battle with cancer. I've carped about Gap's misguided efforts to reinvent itself as a younger, prettier retailer over the years. But due props to Fisher, who helped pioneer the casual clothing market (especially for guys) and will live forever in the form of khaki-clad casual Fridays.

-- David Lazarus

Wilmington refinery fire boosts spot gasoline prices [Updated]

It might be a good idea to fill up your tank now: An early morning fire in the coking unit of the Tesoro oil refinery in Wilmington pushed wholesale gasoline prices up almost 21 cents a gallon. Analysts said that the three-hour blaze would probably kick retail prices up by at least a nickel in the coming days. The increase might be bigger and last longer, depending on the amount of damage at the facility.

"Before this fire, California had been overdue for some relief at the pump. The price was about to drop like a rock," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, referring to it as particularly bad timing for California consumers.

A smaller fire at the Chevron refinery in the San Francisco Bay Area city of Richmond also contributed to the wholesale jump, analysts said. Concerns over the magnitude of the fire damage also kicked oil higher during the trading day, but much of that earlier gain was lost. Crude oil futures for November delivery closed up 13 cents at $66.02 a barrel.

Meanwhile, the gap between what California and the rest of the nation pays for a gallon of regular gasoline continued to widen even as prices dropped slightly since Thursday. The average price of a gallon of gasoline in California fell 0.6 cent to $3.131 from the day before. That was more than 60 cents higher than the national average, which declined by 0.9 cent to $2.525, according to the AAA fuel gauge report, which uses a national sampling of credit card receipts gathered by OPIS and Wright Express.

As of this afternoon, Tesoro officials were still assessing the damage.

"Other units at the refinery are currently operating but at reduced rates," the company statement said.

California fuel costs are still higher than they were a month ago. That's because refineries were processing less gasoline than they were a year ago, leaving supplies tight and subject to big swings if any refinery problems develop.

Tesoro's Wilmington facility ranks third among the company's seven refineries in terms of production and is able to produce 97,000 barrels a day when operating at full capacity. Tesoro's other California refinery, in Martinez, is its biggest, with a capacity of 166,000 barrels a day.

-- Ronald D. White and Nancy Rivera Brooks

Photo: Water is sprayed onto a coking unit that erupted in flames shortly before 5 a.m. at the Tesoro refinery in Wilmington. Credit: Mark Boster / Los Angeles Times

Californians pay more for gasoline

The gap between what California motorists and the rest of the nation pay for retail gasoline widened again over the past week as pump prices rose throughout the state. Analysts said that the price spike was probably the result of low production and tight supplies.

The average cost of a gallon of regular gasoline in California climbed 5.4 cents to $3.153, the Energy Department said Monday. That set a new high for the year for the second straight week and marked the fifth straight week that the state’s prices have topped $3 a gallon. Nationally, the average price dropped for the fifth straight week, falling 1.1 cents to $2.577.

Analysts said that some of the reasons for the unusually large gap of 57.6 cents between the California and national averages could be found in the fact that refineries in the state are running far short of full production, even after accounting for some anticipated and unscheduled refinery downtime.

For the week that ended Sept. 4, California refineries produced 5.8 million barrels of California grade gasoline from a stock of 17.8 million barrels of oil. During the same week last year, the refineries pumped out more than 6.2 million barrels even though oil supplies were nearly 40% lower last year.

"California is really disconnected from the rest of the country on this. Refineries have erred so much over the fear that they would be stuck with an oversupply of gasoline, like they were when prices caved last year, that the result is too little gasoline," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

But Kloza said that California was due for an influx of gasoline and gasoline components from foreign sources that would ease the gap.

"You’ve seen the worst of it out there," Kloza said. Meanwhile, not even talk of the end of a cease-fire between rebels and the Nigerian government or word that Iran was not going to budge on its nuclear stance were enough to keep oil from sliding Monday. Crude oil futures for October delivery were down 43 cents to $68.86 a barrel.

"The oil producing nations have said that that ratio of supply compared to demand is higher than it has ever been. That meant that oil was under a lot of pressure in the markets today," said Phil Flynn, senior market analyst for the Chicago futures brokerage firm PFG Best.

-- Ronald D. White