State's Gas Prices Rise Amid Refinery Woes


The state's average gasoline price zoomed 8 cents a gallon higher in the last week, as rising oil prices and continuing refinery problems crashed into record fuel demand.

The average price of regular unleaded self-serve gasoline was $1.46 a gallon in California for the week ended Monday, up 8.2 cents a gallon from the previous week and 13.6 cents more a gallon than the average price two weeks ago, the U.S. Energy Department reported Monday. The price in Northern California, where most of the recent refinery problems have occurred, is higher by a dime or more than prices in Southern California.

Meanwhile, Californians are using gasoline at the record pace of nearly 980,000 barrels a day, or about 41 million gallons a day. Monthly demand is up about 2% compared with last year because of population growth and a booming economy, said Claudia Chandler, assistant executive director of the California Energy Commission.

"People are out taking vacations--they're not sitting at home anymore," Chandler said.

Nationwide, the retail price of regular unleaded self-serve gasoline jumped almost 3 cents a gallon during the week, to $1.17, the highest level since November 1997, the DOE said. The Energy Department is projecting that the national price for gasoline will average $1.13 a gallon this summer.

Gasoline prices have been rising, as crude oil has rebounded to nearly double the historic low prices reached in December. The August contract for West Texas Intermediate oil closed Monday at $20.44, down 18 cents, on the New York Mercantile Exchange.

But in California, where prices usually are highest because of special fuel mandated by clean-air regulations, prices are jumping for the second time in five months because of accidents at refineries. Most of California's cleaner-burning gasoline is produced by refineries within the state, so any disruption in production is soon reflected at the pump. California's average price last peaked in mid-April at about $1.62 a gallon.

The latest problem came July 9 at Chevron's Richmond refinery, near Oakland. An explosion further reduced production, which already was hampered by an explosion in March.

To avert product shortages, Chevron was granted a temporary variance Thursday by the California Air Resources Board to allow the San Francisco-based oil company to sell up to 147 million gallons of gasoline that doesn't meet the state's strict air quality standards. The gasoline can be sold for about six weeks in Northern California and the Central Valley, but not in Southern California or Sacramento, where pollution problems are worse.

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