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California and the West

Demand Drives Up Gas Prices

July 04, 2006|Ronald D. White | Times Staff Writer

Gasoline prices rose over the last week in California and across the country, a federal survey showed Monday, driven by summer demand and production glitches.

California motorists paid on average 2.6 cents more Monday for a gallon of self-serve regular gasoline compared with a week earlier, and the average U.S. price increased 6.5 cents a gallon, the Energy Department said.

That put the average cost of self-serve regular gasoline in California at $3.189 a gallon, a little more than 73 cents above the year-earlier level, according to the government's weekly roll call of about 800 filling stations.

The U.S. average reached $2.934 a gallon, nearly 71 cents higher than a year earlier, led by a gain of more than 9 cents in the Midwest to $2.913 a gallon.

Prices are on the rise because of tight gasoline supplies at a time of high demand. A variety of refinery and other problems around the country have put a damper on fuel output.

Energy Department statistics released Wednesday showed a larger-than-expected decline in gasoline inventories in the week ended June 23.

California refiners boosted production during that week, but supplies remained 16% below year-earlier levels.

Jeff Spring, a spokesman for the Automobile Club of Southern California, said that there also was concern over whether supplies of the gasoline additive ethanol would be enough to carry the country through the rest of the summer driving season. The price of ethanol, which replaced methyl tertiary butyl ether, or MTBE, as a gasoline additive in parts of the country this year, has soared in recent weeks.

High oil prices also are a factor. Last week, the U.S. benchmark grade of oil passed $74 a barrel before settling at $73.93 on Friday. The New York Mercantile Exchange was closed Monday for the July 4 holiday and will be closed today.

The skittish nature of the fuel market can be seen in its reaction to an oil spill last month in Louisiana that virtually shut down the Calcasieu Ship Channel, the conduit between the Gulf of Mexico and the normally busy Lake Charles oil refining hub.

Because of the spill, vessels delivering oil to at least four refineries were stranded and production was greatly scaled back at the plants, including those owned by Calcasieu Refining Co., Citgo Petroleum Corp. and ConocoPhillips Inc. The refineries have the capacity to refine about 765,000 barrels of oil a day.

Officials had no information on when the spill would be completely cleaned up or when the channel could resume typical levels of traffic. On Friday, the channel was reopened with limited hours.

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