GAITHERSBURG, Md. -- Motorists across the country have begun to notice the uptick in gasoline prices that have hit the last few months, but nowhere in the nation has it been worse than California. You could almost describe California’s gasoline prices the same way one would talk about their weather: scorching hot, with any relief short-lived.
While the national average for a gallon of gasoline stands nearly $1 lower than year ago levels, California sees its average price just 35 cents under a year ago. Zoom in to Los Angeles, the victim of a rash of refinery issues, and you’ll see prices just 19 cents lower than a year ago. L.A.’s neighbor to the north, San Francisco, hasn’t had as many refinery-related issues, and so prices are 44 cents lower than a year ago. In an unusual twist, San Francisco’s average gas price stands some 18 cents a gallon lower than Los Angeles—a level that may hold until refiners in Southern California are back online.
The last month in California has been hellish on gasoline spending and budgets. Orange County, for example, has seen its average gasoline price spike by 91 cents in the last month alone. Following closely behind are Los Angeles with an 89-cent jump, Ventura rising 87 cents, San Diego up 86 cents, and San Bernardino up 83 cents. Shock and awe sets in when one realizes that a month ago just 2.9% of stations in California charged over $3.50 per gallon, yet currently over 99% are.
One only needs to take to social media to see how motorists have taken notice; searching Twitter for “gas prices” turns up dozens upon dozens of complaints. Not surprising is that the number of negative gas-price-related comments on social media now outweighs the number of people tweeting about Justin Bieber. Who’d have thought that day would come?
Litany of Woes
The problem is and has been multi-faced for California markets. Rising crude-oil prices have been a contributing factor. The price of West Texas Intermediate (WTI) crude oil has risen by some $15 a barrel since hitting $43.46 on March 17, just days after St. Patrick’s Day. Clearly what Irish luck we had has run out.
The larger problem has been the excessive number of refinery snags that have hit since early this year. Being a Chicago Bulls fan, I’m all too familiar with this situation, which one could compare to Derrick Rose’s injuries the past few years: Just when you think everything is better and healed, it gets worse.
Several refineries in Southern California have made headlines the past few weeks. ExxonMobil’s Torrance refinery is still mostly down from a fire and explosion earlier this year and may not be back at healthy production levels until mid-summer at best. Combine an April 17 fire at Tesoro’s Martinez refinery, Chevron’s Richmond refinery outage on April 22, maintenance at Phillips 66 refinery in Los Angeles, maintenance at Chevron’s refinery in El Seguno and it hasn’t been the chipper spring that was once hoped for.
Add in the state's summer CARB (California Air Resources Board) gasoline requirement that certainly is among the nation’s cleanest-burning boutique fuel, expenses from its cap-and-trade program, isolation from a wide swath of refined-product pipelines that connect the rest of the country and you have the recipe for the mess that’s taking place.
The good news is that relief may be right around the corner. The rally in crude-oil prices has shown signs of subsiding, which would alleviate one pressure point for the recent rally in gasoline prices nationally and in California. Additionally, California spot and wholesale markets have been cooling off in recent trading sessions from their lofty levels. Cargoes are sailing into California, as witnessed by Energy Information Administration (EIA)Patrick DeHaan data, and according to sources, as many as nine additional cargoes will likely add some relief to a thinly supplied Los Angeles market.
I believe that there’s more downside than upside potential given current circumstances, and that should help bring “deflategate” to pumps throughout California.
Patrick DeHaan is senior petroleum analyst for GasBuddy, Gaithersburg, Md. Reach him at pdehaan@gasbuddy.com
California Vs. National Average Gasoline Prices
Source: GasBuddy
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.