California gas jumps 13 cents overnight. There’s no telling when prices will drop
California gasoline prices continue to skyrocket as Russia’s war on Ukraine grinds on — and experts say there’s no telling when relief might arrive at the pump.
The state’s average price for a gallon of regular gas hit $5.57 on Wednesday, rising 13 cents overnight and cementing it as the most expensive in the nation, according to the American Automobile Assn.
Golden State gas is now $1.32 more than the national average of $4.25, said Doug Shupe, a spokesperson for AAA. The price marks an all-time high, though the figure doesn’t account for inflation.
Even within California’s costly petroleum landscape, certain areas stand out for their eye-popping price tags.
Q&A: How President Biden’s decision to halt U.S. purchases of Russian oil is likely to affect prices at the pump and beyond?
Stations in Mono County are now charging an average of $6.14 for a gallon of regular, making it the most expensive place in California to fill up, according to a tracker maintained by AAA.
Los Angeles and Long Beach also exceed the state average, rising to a wallet-constricting average of $5.65 per gallon on Wednesday. Orange County reached $5.64. The hikes reflect a 13-cent jump from a day prior, Shupe said.
At this point, oil and gas experts aren’t sure what’s in store, but predict prices could increase further unless there’s a dramatic shift in the war in Eastern Europe.
“It’s all dependent on [Vladimir] Putin,” said Severin Borenstein, an energy economist at UC Berkeley’s Haas School of Business, referring to the Russian president.
“If he were to decide tomorrow that this was a bad decision and figure out a way to declare victory and withdraw, the price of oil would go way down,” Borenstein said Wednesday. “But if he pushes ahead, I think it’s quite possible it will go up further. Both of those possibilities are showing up in the market prices.”
California gas prices tend to trend among the highest in the nation due to taxes and environmental regulations that dictate the use of a special blend of fuel. Gov. Gavin Newsom has proposed to pause a planned gas tax increase, and expanded on that during his State of the State speech Tuesday when he said he would introduce a tax rebate proposal for Californians to offset rising gas prices.
But the war in Ukraine has wreaked havoc on prices across the globe, which are primarily driven by the cost of crude oil. President Biden’s decision Tuesday to halt U.S. purchases of Russian oil only added to the broader anxiety about rising prices.
Banning Russian oil will affect West Coast gasoline prices more than those in other parts of the country because the West Coast uses more Russian oil.
Crude oil prices were down on Wednesday, dropping $15 from the previous day at one point, but experts warned that further fluctuations were possible throughout the trading day.
For the record:
5:21 p.m. March 9, 2022A previous version of this article said the price of oil was about $128 a gallon late Tuesday. That was the price per barrel.
When markets closed Tuesday, oil was trading at about $128 a barrel, a massive spike from a month ago, Borenstein said.
Borenstein said the average price for gasoline could hit $6 or $7 per gallon in California, given the recent large jumps in crude oil prices.
According to Borenstein, an increase of $1 in the price of a barrel of crude oil translates to an additional 2½ cents per gallon at the pump. Therefore, if crude oil prices increase by $20 a barrel, it will result in a 50-cent increase for an average gallon of gas.
“So it wouldn’t take a lot to push it above $6,” he said.
Patrick De Haan, head of petroleum analysis at price tracker GasBuddy, said “it’s possible, maybe likely” that L.A.'s average price per gallon will inch toward $6.
“I don’t think $6 is a guarantee yet, but certainly a lot more stations are going to get there,” he added.
You’ve seen the signs advertising $6.95, $6.99 or even $7.05 for a gallon of regular unleaded. But who’s buying it, and why?
The only certainty expressed by De Haan and Borenstein was that there is no certainty in the immediate future.
“Analysts don’t have the crystal ball either,” De Haan said
However, those trading on the futures market for crude oil are betting it will be less costly about a year from now, according to Borenstein.
Futures markets anticipate the cost of delivery a month to a year or more down the line. The price for May 2023 is $30 a barrel lower than for this May, Borenstein said.
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