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Wednesday, Nov 29, 2023


Summertime demand coupled with refinery problems have led to a sharp rise in local gasoline prices during the past month.

The average price for regular unleaded self-serve gasoline, which analysts cite as a benchmark, climbed more than 10 cents a gallon between the end of July and Aug. 18, according to state figures.

“A recent drop in production due to refinery problems has led to decreased supplies,” said Bob Aldrich, a spokesman for the California Energy Commission. “Right now, there’s a lot of driving going on for vacation season, so there’s increased demand.”

As of July 29, the state’s average price for unleaded regular was $1.247 a gallon, and by Aug. 18 the price had gone up to $1.351.

Aldrich said the refinery problems have been ironed out and their effects on prices are wearing off. Because of this and the usual drop in demand as summer ends, consumers are likely to see prices drop in the coming months, though it is difficult to say by how much, analysts said.

Trilby Lundberg, publisher of the Lundberg Survey, an industry newsletter, cited rising prices of crude oil as a major culprit in the higher pump prices. The price of Alaskan North Slope crude, heavily used by West Coast refiners, was priced at $17.90 per barrel on Aug. 18, up from $16.31 on June 20.

An industry rule of thumb is that for every dollar rise in the per-barrel price of crude, the per-gallon pump price of gasoline will go up a nickel, Aldrich said.

Los Angeles gasoline prices are usually a nickel or a dime cheaper than in San Franciso, because the L.A. area has more gas stations per capita and competition is thus greater.

The recent rise in gasoline pump prices is not limited to California. Around the country, unexpectedly high demand as well as refinery problems have contributed to higher prices, according to Ed Murphy, director of finance at the Washington, D.C.-based American Petroleum Institute.

According to Lundberg’s statistics, California’s gasoline has been about 3 cents a gallon more expensive than elsewhere in the nation this summer.

With the 1996 implementation of state requirements for cleaner-burning gasoline, California now has the most stringent emissions standards in the nation. The state is a market unto itself, and must produce its own brew. This eliminates the option of importing supplemental gasoline supplies from out of state when a shortage occurs, Aldrich said.

State requirements for clean-burning gasoline implemented last year have made prices more volatile in California than in the rest of the nation.

“Since the state reformulated its gas requirements last year, (gasoline prices) have gone up faster and fallen faster than anywhere else,” said Lundberg.

For example, she said, a key gasoline additive required by the state is an oxygenation agent called MTBE, and when a shortage in the additive occurs, gasoline prices tend to go up.

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