Gas prices set a new record in California over the weekend. Is this a scam?
Sen. Dianne Feinstein asked the chairman of the Federal Trade Commission to launch an “immediate investigation” into the price spikes because, she stated, “it does not appear the price spike and supply disruption are related to supply and demand.”
In a report over the weekend Reuters suggested a “short squeeze” on the part of refineries might have deliberately boosted your pump costs in the name of profits:
… Many participants may have seen an opportunity to profit from one company's apparent shortfall.
That company is giant refiner Tesoro, which was “caught short” on supply and might have had to rush to short-term sellers in order to meet its commitments to its retailers. An expert told Reuters:
If the word on the street is that a buyer is short on product, then individual traders might make the unilateral decision to hold back to get a higher price.
Yep. And so Feinstein wants to know WTF is going on. She says:
California's consumers are all too familiar with energy price spikes which cannot be explained by market fundamentals, and which turn out years later to have been the result of malicious and manipulative trading activity. It is with this history in mind that I call on the FTC to act immediately and aggressively to protect California's consumers.
Her sentiment came as Gov. Jerry Brown told the California Air Resources Board to allow refineries to start making and selling winter blends, which could ease prices.
Part of California's gas problem, experts told the Weekly, was that refineries were trying not have too much summer-blend fuels on hand when the legally mandated winter blend kicks in at the end of the month
There's not a lot of incentive to keep churning out summer blend, exacerbating the shortages sparked by a couple of state refinery stoppages.
An influx of fresh, winter fuel would help to ease prices. Brown's office:
Gas prices in California have skyrocketed over the past week due to a tightening of fuel supplies caused by shutdowns at Tesoro and Exxon refineries. The Exxon refinery came back online Friday and Tesoro is scheduled to resume production early next week. Combined, these actions are expected to stabilize and reduce fuel prices.
An all time high for gas prices in California was hit Sunday, with the AAA reporting the average price for a gallon of gas in the Golden State was 4.65. That beat June, 2008's high of 4.61.
Of course, you can actually now pay about $6 for a gallon of gas in the L.A. area if your car requires 91 octane fuel. Relief?