Photo: AP Images
When Errol Emrich drove by a Shell station in his San Jose neighbourhood last weekend, regular gas was selling for $4.05 a gallon.On Monday, it was $4.15. On Tuesday, $4.25. And this weekend? Analysts say it could reach a whopping $4.40.
Problems at California refineries have slashed supplies across the state, cutting fuel production and raising wholesale prices — the price stations pay for their gasoline — by as much as 73 cents, to levels not seen since 2007.
And that almost certainly will boost prices at the pump again soon.
“California gasoline prices may surge in the next five days, perhaps to levels higher than February’s $4.33-a-gallon average,” said Patrick DeHaan, an analyst with Gasbuddy.com. “It is within the realm of possibility that average prices reach near $4.40 or even higher if the situation worsens.”
Bloomberg News reported that Exxon Mobil’s 150,000-barrel-a-day Torrance refinery lost power Monday and may suffer production problems for another week.
That sent fuel wholesale prices surging 30 cents a gallon Monday in Southern California. Wholesale prices in the Bay Area, meanwhile, jumped 20 cents Monday.
Chevron’s Kettleman-Los Medanos pipeline, which carries crude from Kern County to Northern California refineries, was shut down Monday after elevated levels of organic chloride were detected in the oil.
In addition, 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.
And maintenance work at the Phillips 66 plants in Rodeo and Arroyo Grande is under way, further curbing state supplies.
“It’s a combination of low inventories and multiple California refinery problems,” said Tom Robinson, head of Robinson Oil Corp. “Really since the Chevron Richmond fire, inventories have been tight. As other refinery problems occur, there isn’t much or any available inventory.
“Retailers are not yet reflecting the wholesale price increases they have experienced, so unless supply problems improve quickly, retail prices will definitely be going up.”
Cynthia Harris, a spokeswoman for AAA, said the current spike is “unique to the West Coast” and not affecting the East Coast or the Gulf of Mexico.
Nationally, prices have fallen three cents from a week ago, down to $3.78 a gallon. That’s the lowest since before labour Day.
But AAA’s current average, which lags behind actual prices by a day or two, is $4.18 a gallon, four cents higher than last week. San Francisco’s average is $4.28, the East Bay is at $4.20 and the San Jose area is paying $4.22.
The spike sent Emrich to a Rotten Robbie on Sierra Road, where last week he found gas for $3.97. On Tuesday it was at $4.25, and Emrich was not happy.
“I see no reason for this at all,” he said. “Sounds like a load of rubbish to me.”
Contact Gary Richards at 408-920-5335.
(c)2012 San Jose Mercury News (San Jose, Calif.)
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