State’s Gas Prices Jump as Nation’s Fall

For the second straight week, California motorists paid sharply higher gasoline prices even though costs at the pump fell across the country, a federal survey showed Monday.

And for the second straight week, state energy regulators searched for an explanation.

California’s average gas price jumped 13 cents to $3.332 for a gallon of self-serve regular during the week ended Monday, another record high for the Energy Department’s weekly survey. Nationwide, the average price at the pump fell a penny to $2.909 a gallon.

“This makes no sense,” said Rob Schlichting, spokesman for the California Energy Commission, which tracks prices and supply-and-demand data for the state. “We know of no market event that would cause what the market is doing right now.”

At the same time, oil refiners in California are collecting record-high gross profit margins on each gallon of gasoline they make.

On May 1, the per-gallon margin for California refiners rose to $1 a gallon on unbranded gasoline and 86 cents a gallon for brand-name gasoline, according to energy commission estimates. At the beginning of 2006, the California margin was 40 cents a gallon for unbranded gasoline and 30 cents for branded gasoline.

California’s fuel producers don’t report their in-state profits to the public or to the energy commission. The agency’s calculation of per-gallon margin is considered an indicator of refiner profits because it does not include the cost of crude oil, a refiner’s largest and most volatile expense.

Joe Sparano, president of the industry trade group Western States Petroleum Assn., said he couldn’t pinpoint a specific reason for California’s stubbornly high retail prices. But he noted that the state suffered from a chronically tight supply of gasoline -- a factor that often triggers price increases.

“That’s just the free market at work,” he said. “I don’t think that anyone has any better explanation.”

But the energy commission has received no reports of import troubles, refinery outages or production cutbacks at the state’s 14 gasoline-making plants. The commission’s latest refinery report, reflecting fuel inventories and production for the week that ended May 1, “was not a bad report,” Schlichting said.

The commission is looking into the aberration as part of a gas-price probe ordered by Gov. Arnold Schwarzenegger.

“If there’s anything that seems in any way illegal or manipulative, then we’re going to be talking to the attorney general,” Schlichting said.

Nationwide, the drop in retail prices seemed to track recent declines in the wholesale cost of gasoline and crude oil.

The downward trend continued Monday as U.S. benchmark oil futures for June delivery fell to $68.25 a barrel before rebounding to settle at $69.77, down 42 cents for the day.

Traders were reacting in part to news that a letter from Iran’s president to President Bush struck a conciliatory note that could head off a showdown over the oil-rich country’s nuclear program. Friction between the two nations had helped drive oil prices above $75 a barrel recently.

In addition, U.S. refineries are coming back on line from maintenance work and have been pumping out more gasoline, which has helped quell fears of supply troubles during the summer driving season.

“There are some things improving,” said Tom Bentz, senior energy analyst at BNP Paribas Commodity Futures Inc.

But “it’s too early to tell whether this is the beginning of something bigger on the downside.”