Gas Prices Rise at Slower Rate
Gasoline prices rose again last week in California and across the nation, but at a slightly slower pace amid signs that prices soon could level out.
In California, prices rose 6.1 cents to a statewide average of $2.145 per gallon for regular, a 2.9% increase. The nationwide average ticked up just 1.6 cents to $1.728 a gallon, according to federal figures.
Analysts, however, saw good news on several fronts. Crude oil prices dropped to $34.93 a barrel, a five-week low, and gasoline for April delivery fell 1.33 cents, or 1.3%, to $1.0271 a gallon on the New York Mercantile Exchange.
In California, analysts said production at the state’s oil refineries had started to rebound and prices for gasoline on the spot market were falling.
“There’s no down yet,” said Jeff Spring, an Automobile Club of Southern California spokesman. “But we were seeing increases of 2 cents a day sometimes, and now we’re talking about less than a penny in some places.”
The 6.1-cent-a-gallon increase for the week ended Monday came after a 7.2-cent jump for the week ended March 10, and a 9-cent jump for the previous week, according to the Department of Energy.
Mark Mahoney, who tracks West Coast gasoline prices for the Oil Price Information Service, said spot market prices in the region were starting to fall after several weeks of increases. On Monday, the spot price -- what buyers pay for same-day delivery -- was hovering around $1.42 per gallon for regular, down from $1.54 per gallon on March 11, Mahoney said.
“We’ve seen [spot] prices go down about 12 cents in the last week, and that can only be a good sign for street prices,” Mahoney said. “You could see retail prices in a holding pattern where they won’t go higher, then we’ll see them drift downward.”
Rising gasoline production also is expected to help ease prices. For the week ended March 7, California’s refineries produced 6.43 million barrels of reformulated gasoline, up 8.2% from the previous week, according to the latest figures available from the California Energy Commission.
The figures suggest that the state is recovering from supply glitches and a bumpy transition to the summer gasoline blend, which helps reduce smog.
This year’s changeover was more complicated than usual because all but two of the state’s gasoline producers opted to replace the additive MTBE with ethanol well before the state’s year-end deadline -- a move that has left wholesale gasoline buyers with less flexibility because the two blends cannot be mixed.
“We’re making the switch-over from winter gas to summer gas, which is problematic in any year, and this year the refineries are making a gasoline that hasn’t been made in great volumes before,” said Rob Schlichting, spokesman for the Energy Commission. The two refineries that serve mostly independent gas stations still are making gas with MTBE, so “until they switch over, it’s going to be a little bit more difficult for the independents to get gasoline.”
Schlichting said the ethanol changeover caused refineries to be offline for longer periods, which lowered production and boosted prices.
One major refinery -- BP’s Carson plant -- was expected to be back in service by now but is still down for a $100-million overhaul that began Jan. 15. That is depriving the market of about 96,000 barrels of gasoline and other refined products per day -- equal to about 10% of the state’s total daily output.
“We recognize the importance of this refinery to the state of California, and our focus is to get it back online as soon as possible,” said Dan Cummings, a spokesman for BP, which supplies Arco brand gas stations.
The refinery snag comes on top of an earlier glitch in San Diego, where a problem blending in ethanol forced BP to pump gas out of 59 stations and return it to the refinery for reformulation, leaving many of the Arco stations temporarily short of fuel.
