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Energy traders who were sitting on excess gas supplies have likely reaped huge windfalls from the California’s gas shortage, Reuters reports.But some also suspect market prices reflect more than fundamentals.
Industry sources who operate in the close-knit, fiercely competitive market say fundamental factors alone cannot explain the 97-cent surge in the premium for prompt-delivery CARBOB gasoline this week. Even in the notoriously volatile California market the spike was unprecedented, pushing retail prices to near a record high of nearly $5 a gallon.
Multiple trade sources say West Coast refiner Tesoro was caught short, forcing it to scramble to buy additional fuel from other companies in order to meet its commitments.
Sen. Diane Feinstein has already ordered an investigation, LA Weekly reports.
We talked with energy markets guru Stephen Schork, and he said he doubted whether anything malicious would have occurred.
However, he said, traders in the cash market for gasoline who already possessed large stocks would have taken advantage of the situation.
“If you’re sitting on inventory, that is the nature of markets,” he said. “If there’s a certain demand, supply will find its way to that market…this is what the market is signaling.”