Gasoline prices fall for first time in a week, barely
California’s average gasoline price edged lower for the first time in more than a week, but analysts warned that any decline would be gradual partly because a section of the huge Chevron Corp. refinery in Northern California is expected to remain closed the rest of the year.
Motorists in the state paid an average of $4.666 for a gallon of regular gasoline Wednesday, down half a cent overnight, according to AAA’s daily survey of fuel prices.
On Oct. 1, the day Exxon Mobil Corp.’s Torrance refinery went out of service temporarily because of a power outage, the average was $4.168. The average leaped to record levels, peaking Monday at $4.671, or 50 cents higher than a week earlier.
A sudden concern about fuel supplies caused some traders to hold on to what they had and buy more, perhaps, than they needed, market watchers said.
In calling for an investigation by federal authorities, Sen. Dianne Feinstein (D-Calif.) cited reports that Tesoro Corp. had been caught short of supplies and forced to pay a premium, which was passed on to service station dealers.
Supplies, already lower than normal, were tightened even more as people scrambled to buy gasoline to make sure they were not caught short, said independent fuel specialist Bob van der Valk.
“Everyone wants their gas tanks on ‘full,’” he said.
Federal Trade Commission Chairman Jon Leibowitz issued a statement Wednesday saying the agency was “keenly aware” of the price surge in California and that “if we see a violation of the laws that we enforce, we won’t hesitate to act.”
A state Senate committee will hold a hearing next month on the safety and reliability of California’s oil refineries.
“I am concerned that refineries have no incentive for keeping their operations safe and fully functional because their profits increase greatly following any type of disruption, whether it is the consequence of a potentially deadly explosion or failed piping,” said Sen. Mark Leno (D-San Francisco), chairman of the Senate Select Committee on Bay Area Transportation.
Although prices are headed in the right direction as far as drivers are concerned, relief may come slowly even though Gov. Jerry Brown has ordered the early release of cheaper winter gasoline, which normally isn’t sold until Nov. 1.
Chevron said Tuesday that the crude processing unit at its Richmond refinery, which caught fire in early August, won’t reopen before the end of the year. The refinery problem contributed to a sharp decline in third-quarter earnings compared with the previous quarter, the San Ramon, Calif., company said.
In addition, some refineries in the state are undergoing maintenance.
Dealers not contracted to sell a name-brand fuel are having trouble finding gasoline to buy in Southern California, Van der Valk said.
“Unbranded gasoline is still unavailable at many of the Southern California terminal racks,” he said, “We may not see pump prices fall fast even with the impending early release of winter-blend gasoline.”
Consumer advocate Charles Langley scoffed at the idea that prices might fall quickly.
“Forget all those sanguine forecasts for lower prices,” said Langley, public advocate for the Utility Consumers’ Action Network in San Diego. “We saw prices drop 0.5 cents last night. Well, rooty toot toot. But you can expect them to stay firm.”
