Four-dollar gas is back.
On Friday, the average for a gallon of regular in the Los Angeles area was higher than $4 for the first time since July, according to daily fuel price reports by AAA and GasBuddy.com. The recent surge in regional fuel prices has left local drivers paying more on average than motorists anywhere else in the U.S.
Analysts attributed the rise to a supply pinch caused by problems at the state’s refineries, and predicted relief may not arrive in time for Memorial Day weekend road trips.
“It’s a major bummer,” said Allison Mac, an analyst with the price-tracking website GasBuddy.
L.A. County drivers on average were shelling out $4.016 a gallon Friday, 18 cents higher than a week earlier, according to GasBuddy. In Orange County, the average was $3.999. San Francisco motorists were paying an average of $3.834.
The increase has drivers like John Williams cutting back. The 55-year old Long Beach resident is eating out less and going on fewer family outings.
“We have less money for food and less money for travel and to do things with our family, so it’s a big hindrance,” he said.
Gasoline prices have risen across California, but the jump has been steeper in the L.A. area because refinery issues have been centered here, said Brian L. Milne, an energy editor with Schneider Electric.
After a February explosion, production is still reduced at ExxonMobil Corp.'s Torrance refinery, he said, magnifying any hiccup at the few refineries that produce the state’s cleaner-burning gasoline. In recent weeks, other California refineries have trimmed output for planned maintenance and unplanned repairs, he said.
That includes planned and unplanned maintenance by Chevron in El Segundo and unplanned work at Tesoro’s Los Angeles refinery, Milne said. Phillips 66 also announced this week that its Los Angeles refinery was undergoing scheduled maintenance, Mac said.
The current amount of planned maintenance is unusual, because such work usually occurs in January and February when demand is low, Mac said. “I am pretty shocked” to see so much work, she said.
Experts say California drivers are highly susceptible to disruptions because the state is a relative island when it comes to gasoline production. California’s special cleaner-burning blend is expensive for outsiders to make and deliver, which is why most production occurs within the state.
And the state’s refineries often produce gasoline at near capacity, leaving little margin for supply disruptions.
If supply is disrupted, facilities must still fulfill long-term contracts to their customers, such as gas stations. For a quick fix, they draw from their slim inventories and try to buy gasoline from traders and other local refineries. That pushes up prices in wholesale markets for the remaining fuel, which finds its way to the retail level in a few days.
For the week that ended May 8, production of the state’s gasoline blend at California refineries was down 11.3% from a year earlier, according to the California Energy Commission.
The swift rise at the pump has drawn condemnation from consumer advocates. Consumer Watchdog said L.A. drivers are paying about $1.30 more than the national average of $2.69 a gallon reported by the Energy Department on Monday. That’s the largest gap since the federal government began collecting the data 15 years ago.
In a recent report, the Santa Monica-based group said refiners reap huge profits from gas spikes and are incentivized to “keep the current system of low inventories, downed refineries and little transparency in place.” The advocacy group called for the state to require refiners to keep a greater volume of gas supply on hand and to mandate the firms be more open about outages so the market doesn’t grow nervous and bid prices up.
Some potential help is coming.
AAA spokesman Jeffrey Spring said gas supplies are being shipped to California from Asian and Canadian refineries. But he cautioned that they are unlikely to arrive before late May and “probably not before many gas stations post $4-plus prices.”
Tom Kloza, oil analyst for the Oil Price Information Service, said there’s a decent chance gas will drop below $4 again by Memorial Day, because wholesale prices have started to fall.
Other experts also predicted that $4 gas isn’t here to stay, but that it would take until June to cross that psychological threshold. If so, that’s unwelcome news for the 2.3 million Southern Californians who plan to hit the road for the upcoming Memorial Day weekend, according to AAA estimates.
Ave Nicolas has already changed his plans for the big weekend. The 31-year-old from Los Angeles nixed his road trip to Lake Tahoe with his wife and two children.
“A little here, a little there, it adds up,” Nicolas said while filling up at a 76 station in Boyle Heights where regular gasoline was $3.99 a gallon.
Instead, the family will drive to Las Vegas. Still a long drive, but not quite as far as Tahoe.