Record High Spot Gasoline Prices in California

Is this the start of a new major round of price inflation? Not quite. The spike appears somewhat temporary in nature, but still noteworthy.

Spot, or wholesale, gasoline in Los Angeles has surged 70 cents this week to a premium of $1.15 a gallon versus gasoline futures traded on the New York Mercantile Exchange, data compiled by Bloomberg show. That’s the highest level for the fuel since at least November 2007, when Bloomberg began publishing prices there. On an outright basis, the fuel jumped to $3.9495 a gallon.

Gasoline at the pump cost $4.232 a gallon in California on Oct. 2, according to AAA.com, 45 cents more than the national average of $3.782. In Los Angeles the price was $4.259, Bloomberg reports. Gasoline futures for the front month on the Nymex sank to the lowest level in 10 weeks yesterday, settling at $2.7995 a gallon, down from $3.342 on Sept. 28. Retail price movements tend to lag behind those of futures.

A Chevron oil pipeline shut down last month, an Oct. 1 power failure at Exxon Mobil)’s Torrance refinery and units down at other plants have cut supplies in the market.

Spot California-blend gasoline, or Carbob, in San Francisco surged 26 cents to $1.10 a gallon over futures, also the highest level since at least 2007.

Bloomberg continues:

Exxon’s 150,000-barrel-a-day Torrance refinery may flare gases for a week as it restores production after a power failure that shut some units and slowed output from others, Gesuina Paras, an Exxon spokeswoman in Torrance, said by e-mail Oct. 2.

Chevron’s Kettleman-Los Medanos pipeline, which carries crude from Kern County to Northern California refineries operated by Royal Dutch Shell Plc (RDSA), Tesoro Corp. (TSO) and Valero Energy Corp. (VLO), remained shut after elevated levels of organic chloride were detected in the oil.

Phillips 66 (PSX) is also scheduled to perform maintenance on process units at its Rodeo and Los Angeles refineries this month, people familiar with the schedules said.
Chevron’s 240,000-barrel-a-day Richmond plant, the largest refinery in Northern California, has been running at reduced capacity since a fire Aug. 6...“The squeeze is on, and people are doing desperate things,” Bob van der Valk, an independent petroleum industry analyst in Terry, Montana, said by e-mail yesterday. “The mom- and-pop gas stations are having to close down from either not being able to obtain gasoline from their regular distributor or cannot afford the break-even price of almost $5 per gallon.”