Gas prices are declining slightly ... very slightly

For perhaps the first time in ten years of price tracking by UCAN, San
Diego gas prices have declined in March. For the next few weeks, we predict
that prices will likely stay flatter than an open can of day-old soda.

Right now the name of the game is "inventory  management." Both OPEC and
the Southern California oil industry are struggling to not overproduce
gasoline in a time of slack demand.

In December of 2008, the big refiners were losing money on every gallon of
oil that they turned into gas. Most of these losses were paper losses that
the industry needed to offset the obscene profits it made earlier this year
when oil reached $147 a barrel on intra-day trading.

This strategy of "losing" money on the downstream helped force some small,
very competitive refiners to the brink of bankruptcy.

These financial difficulties have greased the skids of anti-competitiveness
in California. Big Oil, for example can afford to lose money on paper,
but for small refiners that are not vertically integrated, selling gas at a
loss is a sure way to go bankrupt ... and quickly

And that's exactly what happened in January, 2009: One small refiner in
Bakersfield,  Flying J/Big West, declared bankruptcy in January because it
could not afford to buy oil and turn it into gasoline at a loss.

Who were they buying their oil from?

Shell, of course. See our story "An ugly smell at Shell" for more details.