Are These Crazy Gas Prices Part of a Scam?

The price of gas in Southern California has risen 67 cents a gallon since last week and could continue to increase by as much as 25 cents, according to fuel-pump comparison site

The unusual spike, as global wholesale prices remain low and the rest of the nation enjoys stable or even dropping prices, has many of you scratching your heads.

Maybe you should be.

The folks at Santa Monica–based Consumer Watchdog say that, as West Coast gas companies were claiming they had low supplies that led to the price spike, they were shipping refined fuel to Mexico and South America.

The nonprofit last month forwarded what it says is evidence of price manipulation to the California Attorney General's office, which it says "is investigating the unusual pricing strategies by oil refiners."

The latest spike inspired a new round of claims by Consumer Watchdog, which also are going to the AG's office for its consideration. 

The group's president, Jamie Court says:

Oil refiners have kept the state running on empty and now they are sending fuel refined in California abroad right as the specter of low inventories in the state drives huge prices spikes. There is no good reason for the latest outrageous runup at the pump other than oil refineries manipulating inventories to drive gas prices artificially high. Californians should be outraged ...

The consumer organization said in a statement that refiners have been charging "branded" gas stations a steeper price (30 cents more per gallon) to keep prices up:

As imports fell to zero in July, the specter of low inventories sent prices spiking in Southern California, and exports abroad exacerbated the problem.

Are These Crazy Gas Prices Part of a Scam?

GasBuddy says another hike of 10 to 25 cents is possible in the coming weeks. The L.A. area average for a gallon of gas yesterday was $4.22, 10 cents more than the price this time last year and 15 cents more than Monday's average.

The summer spike "dwarfs" the last greatest weekly increase of 52.7 cents recorded on Oct. 7, 2012, the site says.

"There's an extraordinary level of frustration among consumers, especially on social media, where they ask some very valid questions," says GasBuddy senior petroleum analyst Patrick DeHaan. "‘How long will this last?’ and ‘Why isn’t anything being done?' We believe
the worst of it is over and that the pace of price acceleration will diminish and flatten out within the next week to two weeks."

Keep your fingers crossed.

Send feedback and tips to the author. Follow Dennis Romero on Twitter at @dennisjromero. Follow L.A. Weekly News on Twitter at @laweeklynews.

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