Labor Day gas prices will set a record

As they hit the highway for that last road trip of summer, many drivers will pay more for a gallon of gasoline than during any previous Labor Day holiday weekend.

And it isn’t all Hurricane Isaac’s fault.

In California, the recent Chevron Corp. refinery fire is the main reason the state will see a second straight record high for the gas price average during the traditional three-day ending of the summer driving season, analysts said.

The average cost of a gallon of regular gasoline Friday was $4.157, according to the AAA Fuel Gauge Report, well above the previous record of $3.915 to $3.973 set during the three-day period last year.


The California average is nearly 30 cents higher than on Aug. 7, the day after the fire at the refinery in Northern California, the third-biggest of 14 such facilities in the state. Since then, the refinery has been operating at less than its full capacity of 243,000 barrels a day.

Nationally, the average price for a gallon of gasoline was $3.829, substantially higher than the previous Labor Day weekend record of $3.682 to $3.686, set in 2008.

Analysts cited two Midwest petroleum pipeline shutdowns and two major Midwest refinery outages as the start of the U.S. price surge. Fuel prices had begun to sink when Hurricane Isaac kicked them higher again.

“It’s been the summer of troubles for refineries,” said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

But travelers aren’t likely to change their Labor Day plans at this late date, at least not in Southern California, according to AAA spokeswoman Elaine Beno.

The Automobile Club of Southern California is expecting 2.35 million people in the region to take trips this weekend, up 3.4% from last year’s holiday, she said. About 1.85 million will be driving, up 3.6% from 2011’s numbers.

One of them was Dayna Linares, 25, of Venice, who had used her smartphone app to find the area’s lowest reported price, which was not very low at all: $4.15 a gallon at the Arco at 4th Street and Pico Boulevard in Santa Monica. Linares and two girlfriends were headed to San Diego for the weekend.

“I’m not getting a receipt. I’m not looking. We’re going no matter what,” said Linares, a part-time student who has two waitressing jobs, as she filled up her light blue 2009 Toyota Rav4. “I really don’t want to know how much it is.”


Some relief may be on the way, analysts said. In mid-September, several states will start to switch from summer blends of gasoline to winter blends, which are less expensive to produce, although California’s switch won’t occur until October.

Meanwhile, the impact of Hurricane Isaac on the Gulf of Mexico region was still being felt. Kloza said the flow of fuel from refineries there was interrupted by precautionary shutdowns, but storm damage appeared to be minor.

“You can shut down a refinery pretty quickly,” said Kloza, “but restarting them will take time. These are sophisticated, billion-dollar assets. It’s a little more complicated than flipping the ‘on’ switch.”

Two of the nation’s biggest refineries, ExxonMobil’s Baton Rouge, La., plant (502,000 barrels a day) and Marathon Petroleum’s Garyville, La., facility (490,000 barrels a day), were running at reduced capacity Friday. Two other refineries were being restarted, but five other gulf region refineries remained shut down, including the Phillips 66 Alliance refinery in Belle Chasse, La.


Altogether, the five closed refineries represented a temporary loss in production of 798,000 barrels a day.

Also on Friday, the Energy Department agreed to lend 1 million barrels of crude to Marathon Petroleum, formerly a subsidiary of Marathon Oil Corp., from the U.S. Strategic Petroleum Reserve’s Bayou Choctaw site in Louisiana. The Findlay, Ohio-based refiner agreed to repay the loan within three months, plus extra barrels as a form of interest.

In New York futures trading, the U.S. benchmark contract rose $1.85 to $96.47 a barrel. In London, the European benchmark, which affects prices of U.S. imported oil, rose $2 to $114.97.