Pump prices edge past $3 a gallon in state
California’s pump prices skyrocketed during the last week, putting the state into $3-a-gallon territory for the first time this year, the Energy Department said Monday.
The statewide average price for a gallon of self-serve regular gasoline hit $3.068, up 17.1 cents from the previous week and 53.6 cents above year-earlier levels, according to the Energy Department’s weekly survey of gasoline stations.
The latest California average wasn’t close to the record $3.332 a gallon set in May, but was well above normal levels for this time of year, with analysts blaming problems and strong oil prices.
The gap between California and the rest of the nation continued to widen as California drivers pumped some of the country’s most expensive gasoline. In Los Angeles the average pump price was $3.058 a gallon and in San Francisco it was $3.184.
Nationwide, pump prices rose 5.4 cents to $2.559 a gallon, the sixth weekly increase in a row. The average U.S. price was 19.3 cents a gallon higher than a year earlier.
“It would not surprise me to see spikes as high as $3.50 in California,” said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago. Strong demand and tight imports mean “the California refineries will have their backs to the wall,” he said.
Another who saw the possibility of $3.50 a gallon was Phil McPherson, director of research at C.K. Cooper & Co. in Irvine. McPherson said that oil would have to reach $70 a barrel to drive gasoline to the $4-a-gallon threshold.
“I think that most of the jump is because of refinery issues and demand going up before the driving season, but I think oil is going to stay around $60,” McPherson said, adding that the Organization of the Petroleum Exporting Countries had failed to meet its promise to reduce production, while non-OPEC countries were exporting more, leaving “a lot of excess oil around the world.”
But Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said that the price run-up was “in the ninth inning,” barring more refinery problems.
The refinery pressures in the last week included mechanical problems at Tesoro Corp.'s Golden Eagle facility near Martinez, Calif., and a power failure at Shell Oil Co.'s Wilmington facility. Also, a Texas refinery that supplies gasoline to Arizona remained shut, adding pressure to Los Angeles refineries to fill the gap in deliveries.
In New York futures trading Monday, crude oil for April delivery sank $1.16 to $58.91 a barrel because of profit-taking, a slight thaw in U.S. relations with Iran and North Korea, and predictions of warmer weather, analysts said.
Oil prices fell sharply in January but have since rallied to the $60-a-barrel neighborhood.