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Whereas costs declined nationwide, the ache on the pump intensified this week in California as the common worth of a gallon of regular-grade gasoline in Los Angeles County exceeded $6.
Consultants attributed the rise in native costs to latest hassle at a handful of California oil refineries. PBF Power refineries in Torrance and Martinez in addition to a Valero refinery in Benicia outdoors San Francisco have skilled issues in latest weeks that brought on successful to gasoline manufacturing, driving costs up, mentioned Patrick De Haan, head analyst at GasBuddy.
The PBF Power Torrance refinery specifically is an important supply of fuel for Southern California. A energy outage on March 6 led to a key unit going offline, with no replace on when it can restart, mentioned Marie Montgomery from the American Car Assn.
These refineries have undergone “flaring,” a burning off of gases that need to be launched when an issue causes the refinery to enter security mode, De Haan mentioned. This may very well be on account of a pc or valve situation, however refineries usually don’t disclose particulars.
It will probably usually take two to 4 weeks for a refinery to return to full capability, in response to De Haan. The lower in California’s fuel provide can have a ripple impact up the West Coast, probably affecting fuel costs in Oregon and Washington as properly.
The most recent milestone caps months of quickly rising fuel prices — made worse by the warfare in Ukraine — which have hit customers onerous.
A set of early numbers have indicated a slight lower in demand for gasoline on the West Coast whereas demand has elevated in each different area throughout the nation, De Haan mentioned. This might recommend “demand destruction,” a phenomenon that happens when costs are so excessive that Individuals begin to modify their habits, he mentioned.
In L.A., the common price of $6.01 per gallon topped California’s common of $5.86 and the nationwide common of $4.24, in response to the AAA. L.A. County common fuel costs topped $5 per gallon for the primary time lower than a month in the past — on March 3.
Neighboring Southern California counties aren’t far behind Los Angeles, with the common worth of a gallon of regular-grade fuel in Orange County at $5.97, in Ventura County at $5.95, in San Bernardino County at $5.90 and in Riverside County at $5.88.
Throughout the nation, the common fuel worth peaked at $4.33 per gallon on March 11 and has since dropped 9 cents.
Nonetheless, the nationwide common may very well be artificially pulled down by states akin to Maryland and Georgia that handed fuel tax holidays on Friday, Haan mentioned.
California’s Legislature was looking to temporarily suspend its gas tax — the second-highest within the nation — however Republican lawmakers didn’t get sufficient votes. Congress has additionally struggled to cross its personal laws suspending the federal gas tax.
California’s Democratic lawmakers have as a substitute pushed for a $400 gas rebate, arguing it could alleviate the burden on Californians with out affecting transportation funding supplied by the fuel tax. On Friday, leaders of the state Senate and Meeting proposed a plan to supply broader-based refunds to handle the growing price of all items by $200 funds for every California taxpayer and dependent.
In the meantime, California fuel costs proceed to steadily enhance, and the hole between county and state costs has additionally widened, from 1.2% in the beginning of March to 2.6% as of Tuesday.
Refinery points aren’t the one perpetrator, nonetheless; different unpredictable components akin to the continued warfare in Ukraine and the worldwide market additionally have an effect on fuel costs in California, De Haan mentioned.
The price of gas had already been rising over the past 12 months on account of pandemic-related supply-chain points and inflation, however fuel costs have jumped to historic highs since Russia started its Feb. 24 invasion of the previous Soviet republic.
California constantly has the most expensive gas within the nation because of the state’s environmental legal guidelines and its taxes on motor fuels. Throughout hotter months, the state requires a particular mix of gasoline designed to cut back air air pollution that’s extra pricey to provide.
However how excessive will costs go?
“It’s anyone’s guess,” Montgomery mentioned. “If this refinery situation will get resolved shortly, then we don’t count on it to get any increased.”
One other clue is the price of crude oil. The value per barrel peaked round $128 on March 8 and dropped under $100 per week later, however the barrel worth has crept again as much as $115 as of Tuesday, in response to Brent crude costs.
Fuel costs normally observe within the footstep of oil costs, however they don’t at all times transfer completely in tandem, Montgomery mentioned.