California drivers may soon pay $4 a gallon at the pump after refinery upsets pushed up the wholesale market in San Francisco to the strongest level in almost seven years.
San Francisco spot gasoline traded at its highest premium to futures since 2012 and Los Angeles was the highest in almost four years on Tuesday. An alkylation unit at Valero Energy Corp.’s Benicia refinery, which makes high-octane gasoline, went down over the weekend, according to Genscape Inc. A failed unit restart at Chevron Corp.’s El Segundo refinery and a crude unit upset at PBF Energy Inc.’s Torrance facility, both near Los Angeles, also boosted prices.
California fuel prices are typically volatile, as the state has tighter emissions standards, which make its fuel more expensive to produce. Also, the West Coast isn’t connected by pipeline to the bulk of U.S. refineries along the Gulf Coast, so when local refineries aren’t able to churn out enough fuel, suppliers need to pay much higher prices to draw in cargoes from Europe or Asia.
GasBuddy senior petroleum analyst Patrick DeHaan said $4-a-gallon gasoline could be ahead for California drivers. The San Francisco average price Tuesday was $3.89 per gallon and rose to $3.94 a gallon as of publication time Wednesday, according to AAA. In the Los Angeles-Long Beach area, the average hit $3.84 on Wednesday, according to AAA.