Pump Prices Pass $3.20 in California
Pump prices in many places around the country have started to slide, a federal survey showed Monday.
But Californians, who are paying the most ever for gasoline, face a bleaker picture, in part because of refinery problems.
The statewide average cost of self-serve regular leaped 13.4 cents in the last week to $3.202 a gallon, the Energy Department said Monday. The nationwide average -- damped by declines in Chicago, Miami and other cities -- rose half a cent over the last seven days to $2.919 a gallon, the weekly survey showed.
Fuel prices are easing in several spots, industry experts said, because worries have subsided among traders that distribution glitches and shortages of the fuel additive ethanol could cause widespread problems heading into the summer driving season.
“For all intents and purposes, the transition [to ethanol] is over, and because of that, the rest of the country is starting to see some relief,” said Andrew Lipow, an industry consultant in Houston.
Gas prices in California, which switched to ethanol years ago, are still setting fresh records, even accounting for inflation. In Los Angeles, the average price for a gallon of self-serve regular was $3.262 on Monday, a new high; in August 1981, the average price in Southern California peaked at $1.432 a gallon, or about $3.14 in today’s dollars.
Experts watching California’s market Monday warned that a sharp increase in wholesale gasoline prices could trigger big jumps in pump prices in the coming week.
Oil Price Information Service, which tracks trading prices for gasoline and other products, said the cost of regular gasoline Monday was far above previous record highs on the Los Angeles spot market, where refiners and others buy and sell fuel in bulk for delivery within a week.
That market, although somewhat thinly traded, is considered an indicator of future retail prices.
The spot price for regular in Los Angeles jumped to $2.908 a gallon Monday -- the equivalent of a retail price of $3.50 to $3.60 a gallon after adding taxes and shipping costs, according to Oil Price Information Service. That put the California price about 75 cents above the gasoline futures being traded on the New York Mercantile Exchange, a differential that is normally about 30 cents and has rarely topped 50 cents.
At that price, a barrel of gasoline costs more than $122. By comparison, crude oil futures, which recently hit a record-high $75.17 a barrel, closed Monday at $73.70 a barrel, up $1.82.
“I’m just amazed,” said Lipow, who once traded gasoline and other products in California. “I’ve certainly never seen these numbers.... It feels to me like panic buying.”
Lipow said many of California’s largest refiners have been buying gasoline on the Los Angeles spot market, including Chevron Corp., Exxon Mobil Corp., Shell Oil Co. and Valero Energy Corp.
“I’m seeing all this buying going around,” he said. “It seems that everyone is short and scrambling to find supply.”
As for the cause, no one knew for sure on Monday. Oil Price Information Service and others said some refiners might be having lingering problems that could be cutting into production.
On Monday, a brief power loss at a ConocoPhillips refinery in the San Francisco Bay area caused a short shutdown, and smoke from the incident triggered the community alert system. ConocoPhillips spokesman Mark Hughes did not return a phone call seeking comment.
Refiners are notoriously tight-lipped about daily operations.
“These things occur because something went wrong in the plumbing -- a ship didn’t come in or a refinery broke. Something happened to supply that was unexpected,” said David Hackett, president of Irvine-based consultant Stillwater Associates. “But it’s hard in real time to know what’s going on.”
A spokesman for the California Energy Commission, which is supposed to be alerted to refinery outages, couldn’t point to a cause for the spot spike either.
“There’s nothing that I know of,” said spokesman Rob Schlichting. “It’s kind of worrisome.”