California Gas Prices Decline
Gasoline prices in California fell Monday for the first time in a month, but the small decrease of about a penny a gallon showed that sharply lower wholesale prices had not yet been passed on to consumers.
Pump prices in the state hit a string of new highs throughout May, reaching a record average of $2.327 a gallon last week, according to survey figures from the Energy Information Administration, an arm of the Energy Department. The EIA’s latest survey showed that California’s new average of $2.316 a gallon for self-serve regular gasoline, although down 1.1 cents from the week before, is 62 cents above the year-earlier level.
Nationwide, the cost of self-serve regular fell 1.7 cents to $2.034 a gallon Monday, the second straight weekly decline, according to the EIA.
Worries about the adequacy of summer gasoline supplies continue to cloud the outlook for fuel prices nationwide and in California. Valero Energy Corp., for example, shut down some equipment for 10 days starting Friday at its refinery in Benicia, in the Bay Area, to repair a leak.
Gasoline production at the Benicia refinery, which makes about 10% of the state’s gas, will drop by about 20%, or 840,000 gallons a day, during the repairs, said Scott Folwarkow, Valero’s government affairs director. He wrote state officials late last week to assure them there would be “very minimal market impact, if any,” from the shutdown because the company has imported extra shipments of gasoline and fuel ingredients to cover the lost production.
Meanwhile, signs are turning positive on the Los Angeles spot market for gasoline, where prices can swing wildly as traders vie for a slim supply of extra barrels of gasoline.
The wholesale cost of regular gas on the local spot market has bounced between $1.50 and $1.62 a gallon. Such wholesale rates are considered a precursor to lower prices at the pump, and should translate into retail prices of between $2.10 and $2.22, according to a commonly used industry formula.
In New York, futures for benchmark U.S. crude oil inched up 17 cents Monday to close at $38.66 a barrel. Gasoline for July delivery jumped 2.35 cents to $1.2014 a gallon Monday on the New York Mercantile Exchange, a rise attributed to reports of mechanical troubles at a large refinery in Mississippi.
