California motorists get a break at the pumps
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California’s spot gasoline market shrugged off refinery fires in Wilmington and Martinez late last week to move lower today. Retail prices around the state also fell for the second straight week as analysts were predicting a drop to about $2.75 a gallon by Oct. 12.
Talk of relief at the pump came on a day in which oil was driven higher by an improving stock market and some concerns over Iran’s missile tests. Crude oil futures for November delivery rose 82 cents, or 1.2%, to $66.84 a barrel on the New York Mercantile Exchange.
The average price of a gallon of regular gasoline in California fell 4.2 cents during the last week to $3.09, which was 57.2 cents below the same week a year ago, according to the Energy Department’s weekly survey of filling stations released this afternoon.
That was in spite of a lack of fresh news regarding the status of Tesoro Corp.’s Wilmington refinery, where a fire in a coking unit burned for three hours on Friday and left the facility running short of its 97,000-barrel-a-day full production levels. Tesoro officials were still assessing the damage today. A second, smaller fire occurred at a Chevron refinery in the Bay Area.
But the wholesale price for CARBOB, or California reformulated gasoline blendstock for oxygenate blending, traded between $1.89 and $1.90 a gallon today after spiking Friday to $2.04 a gallon. Part of the reason for the price decline, analysts said, was that refinery production in the state has been rising in September and climbed ahead of 2008 levels for the first time in several weeks.
During the week ended Sept. 18, California refineries made more than 6.7 million barrels of gasoline or about 1.6% more than the more than 6.6 million barrels they made a year earlier, according to the California Energy Commission’s Weekly Fuels Watch Report. The 6.7 million barrels represent a 4.4% increase over the previous week. The refineries also drew down their crude oil supplies by 7.9% during the same week.
‘Cooler heads prevailed on Monday,’ Tom Kloza, chief oil analyst for the Oil Price Information Service, said about the state’s wholesale fuel markets, later adding that ‘you should be seeing decreases to an average of $2.75 a gallon around the state as gasoline supplies increase.’ Kloza also said that motorists typically travel less during the weeks after the summer driving season.
Los Angeles was still one of the most expensive places in the nation for gasoline. Among the 10 major cities tracked by the Energy Department’s Energy Information Administration, only San Francisco’s average of $3.13 a gallon was higher than Los Angeles’ $3.10 a gallon. Houston had the cheapest at $2.22 a gallon.
Analysts weren’t expecting much pressure on gasoline prices from crude oil, in spite of the fact that Iran tested missiles which Tehran says are capable of striking targets in Israel. Short of an attack on Iran to destroy its nuclear program, the current glut in world oil supplies wouldn’t be affected, analysts said.
‘The markets already know that Iran will always be a trouble spot,’ said Fadel Gheit, senior energy analyst for Oppenheimer and Co. in New York.
Phil Flynn, senior market analyst at PFG Best Research in Chicago, said, ‘The world doesn’t need Iran’s oil right now.’
-- Ronald D. White
