The cost of gasoline in California jumped eight cents overnight and is poised to soar to the highest point this year in what analysts say is a supply problem fueled by refinery and pipeline outages. George Kiriyama reports.
The cost of gasoline in California jumped 8 cents overnight and is poised to soar to the highest point this year in what analysts say is a supply problem fueled by refinery and pipeline outages.
The AAA's Daily Fuel Gauge on Thursday showed the average price for a gallon of regular gas rose 8 cents overnight, to $4.32, and was up 18 cents over the past week.
At least three gas stations in the Los Angeles area were selling fuel for more than $5 per gallon.
Average prices are also high nationally at $3.78 a gallon, but inventories in California are lower than they have been in more than 10 years.
The state's supply is hampered by its strict pollution limits, which require a special gasoline blend.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said prices should continue to rise because wholesale gasoline prices have risen $1 a gallon, but average retail prices are only up 30 cents.
Some gas stations in Southern California are beginning to run out of gas. A Costco Station in Marina del Ray ran out of gas Wednesday and customers were directed to another Costco in a nearby town.
Some gas stations in Southern California have also stopped buying gas on the wholesale market because of the skyrocketing price.
Jeffrey Spring, an analyst with the Auto Club of Los Angeles, told NBC LA that there are several reasons for the spike in prices at the wholesale level. First, he said, wholesalers deliberately let their supplies of the special summer formulation of gas required by California state law for use in the warmer months, because they expected an influx of the less-expensive fuel used in the fall and winter.
But then, a power outage at a major refinery and fears of contamination in a Kern County pipeline drove supplies down further. To make matters worse, a refinery here in the Bay Area was hit by a fire earlier this year is still not back up to capacity, Spring said.
“Concerns in the wholesale market caused retailers to panic a couple of days ago,” Spring said.
Many purchased supplies quickly and pushed prices way up.
“It’s the biggest spike we’ve seen all year,” Spring said.
The Auto Club is expecting the price hikes to be “severe, but short-lived.”