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California's average gas price is highest in U.S., $3.845 a gallon

California surpasses Hawaii and Alaska, where gas prices are almost always the highest in the country. Motorists can blame increasingly expensive oil and the rigors of making California's clean-burning gasoline.

March 05, 2011|By Ronald D. White, Los Angeles Times
  • Mideast turmoil drives up oil prices in Europe.
Mideast turmoil drives up oil prices in Europe. (http://www.latimes.com/business/la-fi-oil.eps-20110222,0,5853134.graphic )

California has grabbed the top spot in a painful competition for highest gasoline prices in the nation, surpassing Hawaii and Alaska, the states where fuel is almost always more expensive than anywhere else in the U.S.

On Friday, California drivers paid an average of $3.845 for a gallon of regular gasoline, up more than 3 cents from the day before. With that increase, California became the state with the most costly gas, according to AAA's daily fuel-price survey, toppling Hawaii, which was close behind at an average price of $3.836. Alaska came in third at $3.80.

Motorists can blame increasingly expensive oil and the rigors of making California's clean-burning gasoline, which is produced by few refineries outside the state, experts said.

In New York futures trading, U.S. benchmark crude rose $2.51 to $104.42 a barrel, the highest closing in 2 1/2 years. In London, the European benchmark Brent crude rose $1.18 to $115.97 a barrel.

California has been hit harder than many other states by rising oil costs because its refineries use a significant amount of imported oil with a price based on Brent crude. And domestic crude from Alaska, which accounts for more than 15% of the state's oil supply, has been trading at about $116 a barrel, well above the U.S. benchmark grade.

The pain at the pump is persuading some Californians that they need to do more to free themselves from fuel-price distress.

"We'll be passing European gasoline prices next," quipped James Fong, a 54-year-old AT&T technician. But Fong wasn't laughing much as he drove his gas-electric hybrid past Los Angeles service stations selling gasoline for $3.99 to $4.19 a gallon.

"I own a Prius, but I don't want to rely on gasoline at all anymore," Fong said. "I'm saving up for a Tesla."

Typically, Hawaii and Alaska drivers have it worse than those in the rest of the nation. That's because all of Hawaii's oil is shipped there, mostly from Alaska, said Bob van der Valk, a fuel-price specialist and petroleum consultant. And Alaska has to ship some of its oil to be refined in the Pacific Northwest and then have it shipped back, greatly raising costs, he said.

The last time California's prices were higher than in both of those states on a regular basis was in 2008 during the last gasoline-price shock. And prices are expected to continue to rise if unrest continues in the Mideast and North Africa and fuel demand rises with an improving economy.

"Everyone's price is going to continue to go up," Van der Valk said. "We could be looking at $4.75-a-gallon gasoline in California, but the one that is really going to hurt is diesel, which could go to $5.25 a gallon. This year, we're up the creek without the paddle."

The highest average gasoline price in California was $4.61 a gallon on June 19, 2008, and the record diesel average was $5.152 a gallon a month earlier, according to AAA's survey. The current gas-price surge is being felt nationwide, with 10 states averaging $3.537 a gallon or more: California, Hawaii, Alaska, New York, Connecticut, Illinois, Nevada, Oregon, Washington and Michigan.

The AAA national average, which uses credit card receipts from more than 100,000 retailers around the U.S., rose to $3.471 a gallon Friday, up 4.4 cents overnight.

"A lot of these states are seeing their gasoline prices catch up to the increases in oil prices. Unfortunately, they still have a lot of ground to cover before it ends," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, a price-tracking website.

Some economists fear that soaring energy costs could sap the economic recovery.

"The recent spike in gasoline prices, caused by rebellions in Libya, Egypt and elsewhere, is siphoning off consumer dollars and dampening business interest in adding employees," said Peter Morici, a professor at the University of Maryland's Smith School of Business.

And for drivers like Fong, it was time to take the next step. Fong is not only saving up for an all-electric Tesla, he's also studying how to install solar panels at his home; he figures it will be cheaper to install the solar-energy system himself.

"We're a world economy now. All of the other countries are vying for the same oil we use and it's just going to keep pushing those prices up," Fong said. "I want to get way ahead of the curve."

ronald.white@latimes.com

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