Current Gasoline Prices Reflect an 8-Cent Overnight Gain in California

The Daily Fuel Gauge report of the AAA shows that the current gasoline price in California reflects an 8-cent overnight increase to $4.32, a level that is 18 cents higher versus last week. According to analysts, the price is set to surge quickly and move beyond its highest level for this year so far, at $4.37 per gallon, after refinery interruptions and pipeline issues left the state with supply shortages

In 2008, California reached its highest average price per gallon of regular gas, at $4.61.

Among the latest interruptions, a fire at the Richmond refinery of Chevron Corp on August 6th left one of the biggest refineries in the region with lower production capacity. A power interruption in the Southern California has impacted a refinery of Exxon Mobil Corp. Moreover, a Chevron pipeline that transports crude to Northern California closed down.

In other parts of the state, the current gasoline price average is $3.78 per gallon, a record high for this time of the year. But the price of gasoline in most other states has started to fall, which is usual for the month of October. However, gasoline supplies in California at their lowest level in over a decade, a situation worsened by the strict state-level pollution limits that require a special blend of gasoline.

The highest prices statewide are found in Los Angeles, where not less than five stations have reached the $5 per gallon level, including Burbank’s $5.29 and Norwalk’s $5.11.

The increase in the price of wholesale gas causes a rise in the price of retail gas. During the previous week, the price of wholesale gasoline gained a dollar per gallon, yet average prices of retail gas have only risen by 30 cents. The most likely forecast is that the prices of retail gas are going to surge until the difference is made up.

The rise in the price of wholesale gasoline can be especially difficult on independent stations that usually spend more for gas since they are not part of a bigger chain.

OPIS chief oil analyst Mr. Tom Kloza said that he has heard of some station owners in California closing their pumps instead of charging a gasoline price today of at least $4.90 per gallon just to break even. However, there are several companies who don’t want to annoy their customers and are restraining their increase in retail prices, selling the fuel at a loss instead.

Other drivers in San Francisco have been taking the latest increases in gasoline lightly. However, with the gasoline prices today reaching almost $5 per gallon, some are thinking of changing their methods of transportation.

Several analysts think that national prices will start to fall soon. However, they say that California may see a

lengthier surge considering its unique fuel needs. At the national level, prices will fluctuate in the coming weeks, with retail gasoline prices eventually falling slowly but consistently, especially in the Southeast and Midwest.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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