Gas Prices Could Reach All-Time High in L.A. as Some Stations Expected to Shut Down
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Southern California is an island of gas-price hell this week. One station in Calabasas is charging nearly $6 ($5.89 to be exact) a gallon for high-octane fuel, the Costco in Simi Valley has run out of regular-grade gas (with other stations expected to follow suit), and one expert tells us that all-time high pump prices could be reached in L.A. this month.
What the hell is happening?
Even as pump prices had been falling in the rest of the country recently, Los Angeles is experiencing a surge as a result of refinery issues:
The AAA of Southern California says we have seen the largest one-day price spike -- 9 cents -- all year and blames " a 'perfect storm' of record low inventory coupled with refinery incidents."
Those incidents include a power outage at Exxon's 150,000-barrel-a-day refinery and Torrance that has shut down some of its output and the shutdown of a Chevron pipeline that moves crude from the Central Valley to Northern California.
Additionally, Chevron's Richmond plant in the Bay Area has been going at less than full-speed since early August.
Denton Cinquegrana, executive editor at the Oil Price Information Service told the Weekly that this week's heat wave "played a huge role -- knocked out Exxon in Torrance this week."
He also noted that the ConocoPhillips refinery in Wilmington had an untimely outage for maintenance in mid-September, which hasn't helped.
AAA spokesman Jeffrey Spring says in a statement that refineries were also letting their supplies run out in anticipation of the annual switch from summer blends to winter blends:
Reportedly in recent weeks, local refineries were dropping production levels, exporting supply to Mexico and other countries, and allowing inventory to dwindle in anticipation of switching over to production of 'winter blend' gasoline, then a refinery power outage and a pipeline incident occurred on Monday that sent wholesale markets into a panic about the adequacy of California fuel supplies.
Cinquegrana says things will get worse before they get better. He notes that some suppliers of unbranded gas have told stations "we're out until further notice."
"That's rare," he says.
The Costco in Simi Valley has run out of unbranded regular and was giving customers high-octane fuel at regular prices today. Cinquegrana:
Costco -- a huge retailer -- is running out. They can't get their hands on barrels. A guaranteed buyer can't get hands on barrels. What's a mom and pop shop to do?
Don't be surprised if some independent stations close temporarily, he said.
Will Southern California meet or beat our all-time average gas-price high of $4.61, which happened in June, 2008?
"I think we have an outside shot at it," Cinquegrana says.
The good news? A consumer backlash and reduction in driving will level off prices a little, and SoCal's annual switch to cheaper winter blends will bring immediate relief, he says.
But it will be worse before it gets better: That switch won't happen for at least another two weeks.
[Added at 12:38 p.m.]: Jeffrey Spring of AAA tells us it could be "7 to 10 days" before we see any relief at the pump.
He notes we're about 28 cents from our all-time high and says we're still in the midst of "a sharp spike:"
I'm not sure how high it will go. But it'll start tapering off towards the middle of the month.
The only thing you can do now is ease off the pedal, "clear the junk from your trunk" and save fuel as best you can, he says.