Record High Prices At The Gas Pump Likely To Linger In California

Oct 5, 2012
Originally published on October 5, 2012 10:07 pm

Gas prices spiked overnight Thursday by as much as 20 cents per gallon in parts of California, causing some stations to close and shocking many customers.

According to The Associated Press, the average price of regular gas across the state was nearly $4.49 a gallon. In other parts of the country, gas prices have fallen. South Carolina has the lowest average gas prices in the continental U.S. at $3.49 a gallon.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, told AP that the highest gas prices in California were around Los Angeles, where at least five stations crossed the $5 a gallon mark on Thursday.

But sadly for drivers in the Golden State, gas prices will keep going up, because while wholesale gasoline prices have increased $1 per gallon, average retail prices have increased by just 30 cents, according to DeHaan.

The AP also says:

"The national average for gas is about $3.79 a gallon, the highest ever for this time of year. However, gas prices in many states have started decreasing, which is typical for October.

But in California, gasoline inventories are the lowest in more than 10 years — a situation made worse by the state's strict pollution limits that require a special blend of cleaner-burning gasoline during hot summer months."

What's fueling these high prices? Refinery and pipeline troubles, which pushed wholesale costs to a record high this week, according to the Los Angeles Times.

The Times reports:

"Analysts attributed the increase to mishaps that have befallen some of the state's 14 refineries, which operate with little margin for error because few facilities outside California make the state's cleaner-burning gasoline."

This led some gas station owners to stop buying fuel. What if they couldn't sell it? When those stations ran out of the cheaper gas, they closed their pumps.

Other station owners just took a chance on the more costly fuel, hoping customers would understand.

NPR's Carrie Kahn will report more about price pressure at the gas pump on this afternoon's All Things Considered.

(Tanya Ballard Brown is an NPR.org editor.)

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block. California drivers are in shock. Gas prices have gone through the roof. As NPR's Carrie Kahn reports, in some parts of the state, the price for a gallon of gas has jumped more than 50 cents, 5-0, in just the past five days.

CARRIE KAHN, BYLINE: At the intersection of Slauson and La Brea in L.A.'s Baldwin Hills neighborhood, there's a gas station on every corner. Competition is usually pretty fierce, but today everyone's charging the same price - $4.65 for a gallon of unleaded.

DEBORAH PITTMAN: It's crazy. It's like gone up 10 cents overnight.

KAHN: Well, actually, it went up 20 cents last night. So Deborah Pittman says she'll just put in a few gallons.

PITTMAN: I'm not filling up though. I'm only getting a couple of dollars.

KAHN: Nobody's been filling up.

PITTMAN: No, can't afford it. Cannot afford it.

KAHN: Some stations in L.A. are charging more than $5 a gallon. In San Francisco prices have shot past $6. The owner of La Brea Gas, John Kim, says he can't sell at prices that high. So last night, when gas kept rising, he just closed shop.

JOHN KIM: I have never seen anything like this.

KAHN: And he's been selling gas on this corner for 26 years. Last year, he decided to go independent. Now, he has to buy on the daily market, unlike the brand name stations that buy in bulk at lower prices. So this morning, when he opened up, he was back in the red.

KIM: I'm losing 45 cents per gallon right now.

KAHN: Why are you still open?

KIM: Well, you know, I have to stay open. Because my regular customers depend on me. I just don't want them to start developing a habit of going elsewhere. So I'm taking a big hit right now.

KAHN: It's unclear when prices will stabilize. Jay McKeeman, of the California Independent Oil Marketers Association, says supplies are low. He says there was a power outage at a Southern California refinery, lingering problems from a fire at a plant in Northern California and a pipeline issue.

JAY MCKEEMAN: Because this state has a very complex fuel supply regulatory framework we just become very vulnerable to these kind of situations.

KAHN: His group has asked the state to relax air pollution rules so stations can sell the more abundant winter gas blends available elsewhere. Officials say they're evaluating the request. Meanwhile Fred Triplet, whose Chevy pickup has a 30-gallon tank, says he's only going to fill up half way.

OK, you're up to $63.

FRED TRIPLET: I'm probably going to put $70 and leave it alone and drive slow and see if I can save some.

KAHN: Or better still, he'll just hope gas prices drop in a few days. Carrie Kahn, NPR News. Transcript provided by NPR, Copyright NPR.