Gasoline prices across the US was down for weeks. After a high summerprice has dropped up to $3 in some places. University lecturer’However, do not count California by these places: As is Orange County Register report, Gas prices in the Golden State are increasing $2 more per gallon compared with the national average in most parts of the state.
As of September 26, national average of gas prices sit at $3.72 per gallon. California? One bother $5.79 each gallon. What the hell is going on?
While some may point to political explanations for the price disparity, the real reason behind the price increase in California is simpler. Most of the fuel sold in California comes from local refineries – the state is known as the “fuel island”. Several local companies operate refineries that supply most of the state. While this looks nice on the surface, it could lead to price spikes in the area whenever there is a problem with one of the refineries.
A representative for Oil price information service explain to the the’s OC CHEAPfor example that many oil companies have skipped their usual equipment maintenance this spring. The spike in fuel prices caused by the war in Ukraine has encouraged refiners to keep pumping fuel instead of stopping their equipment for maintenance. Now, that short-term thinking is causing problems, as equipment failures and shutdowns at some refineries cause output to drop, leading to higher costs.
The California Energy Commission call these Production problems are “temporary,” but coupled with refiners implementing deferred maintenance and “lower than normal gasoline inventories,” the result is higher fuel prices for California drivers. .
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There are other factors at play too. California has the nation’s second highest gas excise tax, and environmental regulations call for a special fuel blend to be sold here for against pollution and dust. Those factors combined more like $1.54 for a gallon of gas in California. Prices get worse when you Narrow search down to specific areas. Los Angeles and Long Beach, for example, average $5.84 per gallons right now, increase about 41 cents per gallon versus last week. Orange County is averaging $5.83 per gallons, up 44 cents from the previous week. The inland regions are doing a little better, $5.70 per gallon in Riverside and San Bernardino on average. And the price is expected to increase even more higher.
Meanwhile, oil companies are increasing profits; September is an explosion month for the oil industry. As Tom Kloza, a representative for the Oil Price Information Service, told the OC Register, refiners in the Los Angeles area can make up to $101 in gross profit per barrel of oil; Compare that to Gulf Coast refineries, who typically get a gross profit of less than $7 per barrel.
