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Gasoline prices keep rising in California while falling nationwide

Experts blame low production and tight supplies in the Golden State for the growing gap between the average price of a gallon of regular there and elsewhere in the U.S.

September 15, 2009|Ronald D. White

The gap between what California motorists and the rest of the nation pay for retail gasoline widened again over the last week as pump prices rose throughout the state. Analysts said that the price jump was probably the result of low production and tight supplies.

The average cost of a gallon of regular gasoline in California climbed 5.4 cents to $3.153, the Energy Department said Monday. That set a high for the year for the second straight week and marked the fifth straight week that the state's prices have topped $3 a gallon. Nationally, the average price dropped for the fifth straight week, falling 1.1 cents to $2.577.

Analysts said that some of the reasons for the unusually large gap of 57.6 cents between the California and national averages could be found in the fact that refineries in the state are running far short of full production, even after accounting for some anticipated and unscheduled refinery downtime.

For the week that ended Sept. 4, California refineries produced 5.8 million barrels of California-grade gasoline from a stock of 17.8 million barrels of oil. During the same week last year, the refineries pumped out more than 6.2 million barrels even though oil supplies were nearly 40% lower last year.

"California is really disconnected from the rest of the country on this. Refineries have erred so much over the fear that they would be stuck with an oversupply of gasoline, like they were when prices caved last year, that the result is too little gasoline," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

But Kloza said that California was due for an influx of gasoline and gasoline components from foreign sources that would ease the gap.

"You've seen the worst of it out there," Kloza said.

Meanwhile, the possible end of a cease-fire between rebels and the Nigerian government or word that Iran was not going to budge on its nuclear stance failed to keep oil from sliding Monday. Crude oil futures for October delivery were down 43 cents to $68.86 a barrel.

"The oil-producing nations have said that that ratio of supply compared to demand is higher than it has ever been," said Phil Flynn, senior market analyst for the futures brokerage PFG Best. "That meant that oil was under a lot of pressure in the markets today."


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