Record high prices for gasoline expected

Record high gas prices are likely to climb higher this weekend from the current record high of $3.606 a gallon in San Diego, according to UCAN's Gas Survey at www.fueltracker.com. 

Today, OPIS, the Oil Price Information Service, reported that Valero's Wilmington Refinery has taken 55,000 barrels of capacity a day offline after discovering a leak.

Gas prices surged on the LA Spot Market by almost 10¢ today despite record low consumer demand for gasoline.

Valero has confirmed that the unit could be down for up to ten days.  The shutdown represents a little more than 2% of the state's gasoline production capacity. Although the amount taken offline is relatively small, it adds fuel to an already high-priced fire that started when British Petroleum's Arco refinery in Carson was shut down recently. The Carson refinery, which represents 13.5% of California's refining capacity, has been shut down two weeks longer than expected after its spring turnaround.

Although Valero's leak represents less than a 2% cutback in supplies, it was enough to panic the spot market.

According to UCAN's gasoline Project Manager, Charles Langley, this is the "spring gouge season." Historically, says Langley "Refineries can increase their profits by restricting the supply of gasoline and driving up prices."

 This year, refinery profits have been much lower than normal because of high oil prices (see stats below) and the fact that consumers are buying less gas. As a result, says Langley, it pays to intentionally shut down a refinery in order to shore up prices."

UCAN has argued that the best solutions for preventing the manipulation of wholesale gas prices by oil companies would be to employ "refinery cops" to inspect California's refineries. The inspectors would make sure that refineries operate safely, and are not intentionally shutting down in order to panic markets and increase prices. 

GASOLINE PRICE STATISTICS: 
(source: UCAN's Cheap Gas Locator)

Price Today = 3.605

Price Tuesday = 3.602

Price last Friday = $3.61

This day Last Month (Feb 28) = $3.491

This day last year = $3.28

Cost of oil last year = $61.79 a barrel or $1.47 a gallon
(equal to 45% of the cost of a gallon of San Diego gas)

Cost of oil this year = $105.62 a barrel or $2.51 a gallon
(equal to about 70% of the cost of a gallon of San Diego gas)

Crude Source Energy Information Agency   For more information or background, contact Charles Langley or Michael Shames.