Refinery work means high gas prices for California
Saturday, May 12, 2012
Gasoline prices are falling throughout most of the country. But not in California.
Here, prices are rising again, as maintenance work at oil refineries cuts supplies. With four of the Golden State's refineries partially shut down, and another in Washington state struggling to restart, California's average price for a gallon of regular has jumped 9 cents since the end of April.
It reached $4.25 on Friday, according to the AAA automotive club, which tracks gasoline prices daily. Average prices in San Francisco and San Jose jumped 4 cents overnight to hit $4.34 and $4.27, respectively.
The price spike should be temporary, ending as refineries come back online.
But drivers can expect more increases in the coming days, as retail prices catch up to more extreme changes in the wholesale "spot" market.
"We're probably near the peak now," said Gordon Schremp, senior analyst with the California Energy Commission. "That's historically what we've seen - these are very short-lived events."
The spike isn't confined to California. All West Coast commuters have seen prices climb, with Oregon's average rising 6 cents in the last week to hit $4.07 and Washington's increasing 5 cents to $4.12.
The increase comes even as most of the country enjoys a break at the gas pump. After a swift, steep run-up earlier this year, the national average for regular gas peaked around $3.93 in early April and has been drifting downward ever since. It now stands at $3.73.
It should fall further. The price of oil, gasoline's raw material, slid below $100 per barrel last week and has stayed there, as fears of armed conflict with Iran over that country's nuclear program fade. Oil futures traded on the New York Mercantile Exchange closed Friday at $96.13.
The decline in gasoline prices in most of the country has helped restrain the West Coast's price increase, hard as that may be for drivers here to believe.
"If the broader market were going up too, it would be much worse," said Brian Milne, refined fuels editor for the Telvent DTN business information service. "That's the one saving grace here."
A bull market for crude oil drove this year's first increase in gasoline prices, both in California and the rest of the nation. But now, the West Coast's gas prices are rising again for reasons specific to the region.
California uses its own special, pollution-fighting blends of gasoline, made by a limited number of refineries. Four of the refineries located within the state have been conducting maintenance, slashing their output. That includes three of the five refineries located in the Bay Area: the ConocoPhillips refinery in Rodeo, Tesoro's facility in Martinez and Shell's refinery in Martinez.
Although refineries typically undergo maintenance in late winter and early spring, it is unusual to have so many major facilities down at the same time. As a result, California's gasoline supplies last week were 21 percent lower than they were at the same time last year, according to Energy Commission data.
Complicating matters: a major BP refinery near Blaine, Wash., suffered a fire in February and had to close for repairs, tightening supplies up and down the West Coast. BP tried to restart the Cherry Point Refinery on Wednesday, but stopped after problems arose. The companies that buy gasoline from the facility had to look elsewhere - mostly California - for supplies.
"If companies think there's going to be a restart at a certain time, and it doesn't go as planned, people will jump back into the marketplace and buy in significant volumes," Schremp said.
David R. Baker is a San Francisco Chronicle staff writer. dbaker@sfchronicle.com
This article appeared on page D - 1 of the San Francisco Chronicle
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/05/11/BUQI1OGV43.DTL#ixzz1uggeBc2M
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