String of Inside Jobs at Fault For Near-Record California Gas Prices, Pump Closures?

“This is one of the easiest forecasts: Retail prices are going to skyrocket,” Patrick DeHaan, senior petroleum analyst at GasBuddy.com said Thursday regarding prices at the pump. In the San-Francisco-Oakland Bay area, gas prices went up at a Union 76 station to $4.79 up from $4.59 from Wednesday. Premium gasoline was $4.99. In California, the average prices of a gallon of regular gasoline went up 8 cents overnight to $4.32, up 18 cents in the last week alone.  Oil is posed to ease above $4.37 per gallon, the year’s high so far – after refinery outages and pipeline problems have left California short oil.  A string of “coincidences” are held responsible for pushing prices higher: the early August explosion at  Richmond refinery in Northern California; a power failure at a Southern California plant this week;  the shutdown of a pipeline in Central California; and reported scheduled maintenance at a Southern California plant.  

We regretfully inform California that “coincidence” soup is on the menu for the coming months, and the state’s residents will pay dearly  - or catch the bus or get some exercise on that green bike.  

Gasoline inventories in California are the lowest in over 10 years.  DeHaan said he is seeing the highest prices in the state around Los Angeles, where at least five stations have risen above $5 a gallon, including $5.29 in Burbank and $5.11 in Norwalk.  He expects prices to continue to rise, because in just the past week wholesale gasoline prices have jumped $1 a gallon, while average retails have only gone up 30 cents.  Independent gas stations will wear the biggest burden, as they usually pay more for the gas because they are not a part of a larger chain.

Abetting the rise in prices, Tom Kloza, chief oil analyst at Oil Price Information Service, said he is hearing reports that some California station owners are shutting their pumps off rather than charging the $4.90 a gallon or more needed to break even.In San Diego County, the average price of a gallon of self-serve regular recordedits largest daily increase since at least 2009 on Thursday. The price rose 9.2 cents to $4.328, its highest amount since May 22. This was the sixth consecutive day the price of gas in the county has recorded an increase, and is up 21 cents more than one week ago, 17.6 cents higher than one month ago, and 50.6 cents higher than one year ago, according to data from AAA and Oil Price Information Service. In the past two days, the average price for self-serve regular has gone up 15 cents.Local reports are blaming a power failure at the ExxonMobil Torrance Refinery which could lead it to flare gasses for a week, reducing gasoline supplies, according to Marie-Montgomery Nordhues of the Automobile Club of Southern California told City News Service. The Torrance Refinery power failure has led to a strong, sulfur-like odor lingering above cities across the South Bay on Thursday. Although officials say the odor poses no health risk, some area residents have reported feeling  temporarily sick. ”It’s a nauseating, rotten-egg smell.”The ExxonMobil Refinery power failure comes nearly two months after a Chevron oil refinery in Richmond, Calif., in the San Francisco Bay Area, exploded, blanketing  the near vicinity in black smoke and ash.  The ensuing fire sent hundreds to the hospital. The refinery itself had a history of neglect, having been cited by San Francisco Bay area regulator’s 93 times in five years. The explosion at the facility immediately sent the price of regular self-serve in California up 3 cents, said analyst DeHaan. The incident was a Level 3 incident, the highest possible level.

 

Further, Chevron’s Kettleman-Los Medanos pipeline, responsible for bringing crude from Kern County to Norhtern California refiners operated by Royal Dutch Shell Plc (RDSA), Tesoro Corp. (TSO) and Valero Energy Corp. (VLO) remained shut down Thursday due to elevated levels of organic chloride detected in the oil. Also, Phillips 66 (PSX) is scheduled to perform maintenance on process units at its Rode and Los Angeles refineries this month.

The highest ever average price of regular gasoline was in 2008, when the price reached $4.61.  Either some “strange coincidences” have rocked the state of California over the past couple of months or the failures are the expected events of a decaying infrastructure not only in California, but across the United States, which has led to increasing amounts of environmental crisis and commodity depletion and reported shortages.

 

 

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