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Analysts: Spike in gas prices may linger

Tony Klein fills up his 1967 Cutlass V-8 on Thursday at a gas station in Los Angeles, as fuel prices continued to climb.  AP photo

Motorist Tony Klein fills up his 1967 Cutlass V-8 at a gas station in Los Angeles Thursday, Oct. 4, 2012. Motorists in California paid an average of $4.232 per gallon Wednesday. Thatís 45 cents higher than the national average and exceeded only by Hawaii among the 50 states. (AP Photo/Damian Dovarganes)

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From page A2 | October 05, 2012 | 1 Comment

SAN FRANCISCO (AP) — Californians woke up to sticker shock Friday as overnight gasoline prices jumped by up to 20 cents a gallon in some areas, prompting some stations to close and others to charge more than $5 a gallon.

The AAA Daily Fuel Gauge report says the average price of gas across the state was nearly $4.49 a gallon — highest in the nation. In Southern California, the price jumped 20 cents a gallon to $4.53 in Ventura and 19 cents to nearly $4.54 in the Los Angeles-Long Beach area. In San Francisco, a gallon of regular gas is nearly $4.60.

The highest average price ever for regular gasoline in the state was $4.61 in 2008.

The recent spike in gasoline prices around the nation is expected to wane slowly in coming weeks, but California may not be so lucky due to supply challenges fueled by refinery issues and pipeline outages, analysts said.

Among the recent disruptions, an Aug. 6 fire at a Chevron Corp. refinery in Richmond left one of the region’s largest refineries producing at a reduced capacity. A power failure in Southern California has affected an Exxon Mobil Corp. refinery, and a Chevron pipeline that moves crude to Northern California also was shut down.

Elsewhere, the national average for gas is $3.78 a gallon, the highest ever for this time of year. However, gas prices in many states have started decreasing, which is typical for October.

But in California, gasoline inventories are the lowest in more than 10 years — a situation made worse by the state’s strict pollution limits that require a special blend of cleaner-burning gasoline.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said he is seeing the highest prices in the state around Los Angeles, where at least five stations have crossed the $5 a gallon mark, including $5.29 in Burbank and $5.11 in Norwalk.

Prices will keep rising, he says, because in the past week wholesale gasoline prices have jumped $1 a gallon, but average retail prices have increased only 30 cents.

“This is one of the easiest forecasts: Retail prices are going to skyrocket,” DeHaan said.

The jump in wholesale prices can be particularly tough on independent gas stations that often pay more for their gas because they are not part of a larger chain.

Tom Kloza, chief oil analyst at Oil Price Information Service, said he’s heard of a few California station owners shutting their pumps rather than charging the $4.90 a gallon or more necessary to break even.

“Wholesale price increases lead to retail price increases,” Kloza said. “But there is some restraint among companies who do not want to exercise their current pricing power and irritate their customers.”

Some analysts believe prices nationally will begin to decline soon but say California could see a longer spike given its unique fuel requirements.

“Nationally, I believe most prices will wobble to and fro for the next week or so, with an eventual slow but steady attrition in retail gas prices, particularly in the Midwest and Southeast,” Kloza said. “California is a wild card.”

————

By Jason Dearen. AP energy writers Jonathan Fahey in New York and Sandy Shore in Denver contributed to this report.

The Associated Press

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  • John TroidlOctober 05, 2012 - 7:17 am

    Due to extraordinarily positive circumstances, I am not using ANY California retailed gasoline this month. It's great! I am walking a lot and taking public transportation as needed. Am really feeling the great relief in the pocket book as my family budget for gasoline this month is $0.00. I realize not everybody can do this. But check it out, there may be more options to walk, ride, or share a ride with someone than you may have been considering. Why not call up a friend and suggest you go somewhere together and catch up on news while conserving on gas? Good luck!

    Reply | Report abusive comment
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