Having discovered this week what Americans are spending their "gas savings" on, and noted that nationwide gas prices are rising at the fastest pace in over a decade; as AP reports, for Californians, it's considerably worse as gas prices have soared 60c to $3.23 per gallon in the last few weeks. Between refinery shutdowns (due to strikes and explosions) removing 17% of California's production, and the seasonal shift to the less-polluting summer blend of gas mandated in California, supply remains drastically short spiking prices 20-30c on Thursday alone as one gas station owner exclaimed, in 48 years "I've never seen anything like this kind of [price spike]."
Nationwide, gas prices are rising at the fastest pace in over a decade...
But California is the hardest hit for now. (photo taken Friday in LA)
As AP reports, gas prices are soaring in California in a classic example of supply and demand after an explosion stopped gasoline production at an Exxon Mobil refinery while another remains offline due to labor unrest...
Average retail gas prices in the state have surged 25 cents a gallon in less than a week, from $2.98 per gallon for regular on Monday to $3.23 per gallon on Friday. That caps a run that saw the price of regular unleaded go up 60 cents per gallon since Jan. 30 as refineries prepare to shift to a summer blend of fuels.
In some areas of Southern California, gas station owners were forced to pass price hikes of 24 cents per gallon along to consumers on Thursday after seeing wholesale prices shoot up. Prices in Northern California lagged a day, but by Friday were also rising; an independent operator with a chain of gas stations around the San Francisco Bay area boosted prices 20 cents a gallon for regular on Friday, to $3.19.
The situation underscores the frustrating complexity of the gasoline market in California, where state environmental regulations mandate a specialized blend of fuel that isn't used anywhere else in the U.S.
Because of that, California is economically isolated and can't easily or quickly purchase fuel from outside the state in a crisis.
Between the strike at the Martinez Tesoro refinery and the explosion at Exxon's Torrance refinery, the two facilities combined make up 17 percent of the state's crude oil processing capacity, said Gordon Schremp, a senior fuels specialist with the California Energy Commission.
"It takes a while to get some significant supplies from outside," Schremp said. "It's very normal that we'd see a significant price spike."
Gas station owners, meanwhile, chafed at having to pass the costs on to consumers. The profit margin for station owners was 18.5 cents per gallon in California on Friday, a break-even or money-losing proposition for many independent retailers, said Jeff Lenard, a spokesman for the National Association of Convenience Stores.
In Torrance, station owner Frank Scotto was forced to increase his prices by 24 cents per gallon on Thursday. He hasn't seen such a spike since he went into the gas station business in 1967, he said.
"I printed out the price change and I'm framing this thing because I've never seen this kind of thing in all my years," said Scotto, who owns a Mobil and Exxon station.
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As GasBuddy shows - the California differential is extreme...
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However, while the extreme price moves are hitting California for now, given RBOB's recent rise, nationwide gas prices look set to top $2.60 within a week...
Or as CNBC's Larry Kudlow would say: "Unambiguously ungood" for everyone.