Gasoline prices slowed their decline in California and jumped 10 cents nationwide, as oil companies continued to reduce the amount of fuel they are refining.
The average price of a gallon of regular gasoline in California fell just 0.3 of a cent to $2.985. It was the sixth straight week of declines in the state, but also the smallest drop since the record high for 2009 was reached Sept. 14. Nationally, prices rose 10 cents to an average of $2.674 a gallon.
Oil industry analyst Patrick DeHaan said refineries around the nation have cut way back in an effort to raise prices at a time when they say their profit margins are low.
Refiners typically cut back production in the fall, said DeHaan, senior petroleum analyst for gasbuddy.com, but oil companies are processing less oil now than at any time since September 2008, when Hurricane Ike knocked out several facilities in the Gulf of Mexico.
“Demand has remained the same, but the supply is dropping,” he said. “Two weeks ago, Americans used 220 million more gallons of gasoline than was produced that week. Last week, consumption was 96 million gallon more than what was produced. That has the bulls running and prices rising.”
Meanwhile, crude oil futures for December delivery were down $1.82, or 2.26%, to $78.68 a barrel on the New York Mercantile Exchange.
Phil Flynn, an energy analyst with PFGBest in Chicago, said there were a number of factors in the drop, including some profit-taking after oil last week broke out of the $65- to $75-a-barrel range it had been trading in for several weeks.
“There were more concerns about the economy today, and the dollar got a bit of a boost against foreign currencies,” Flynn said. “When the dollar is stronger, investors are less likely to flee it and go into commodities like oil.”