Hurricane Sandy was expected to kick retail prices higher in the Eastern… (Frederick J. Brown, AFP/Getty…)
California gasoline prices plummeted over the last week, helping drive down the U.S. average by more than 12 cents a gallon.
But Hurricane Sandy was expected to kick retail prices higher in the Eastern U.S. — at least briefly — as refineries there shut down or reduced production as the storm approached.
The average price for a gallon of regular gasoline in California on Monday was $4.169, down 26.3 cents compared with a week earlier, according to the Energy Department's survey of fuel prices.
The state's average has dropped 49 cents a gallon since reaching a record $4.659 a gallon Oct. 9. But that's still 32.3 cents a gallon higher than it was Oct. 29 last year.
Analysts blamed the recent California record price on panic buying by traders over a feared fuel shortage. Another factor, according to the California Energy Commission, was a refinery outage that occurred while the state was near five-year lows in fuel production and fuel supplies.
California's prices were dropping fast enough to pull the national per-gallon average down 11.9 cents over the last week to $3.568 a gallon.
Analysts said the storm-related shutdown of an important New Jersey refinery and cutbacks on production runs at other refineries along the Delaware River may kick up East Coast gasoline prices this week, but they also said any price jump would probably be short-lived.
Phillips 66 said it has closed its 240,000-barrel-a-day Bayway refinery in Linden, N.J., because of the possibility of storm surges from Hurricane Sandy.
The American Petroleum Institute said the oil and gas industry was ready for the storm and prepared to resume full production as soon as possible.
"Hurricane procedures have been implemented and will remain in effect until the passing of the storm," said Bob Greco, API director of downstream operations. "Onshore facilities have been secured for the storm. This includes pipelines, refineries and terminals."
Tom Kloza, chief oil analyst for the Oil Price Information Service, said buyers were reacting to news of refinery restrictions by scrambling for fuel supplies. That, in turn, was raising prices for reformulated gasoline futures on the New York Mercantile Exchange.
Gasoline futures briefly rose about 10 cents early Monday, but had already begun to fall a bit by midmorning, dropping the increase to about 6.5 cents, or $2.7641 a gallon, Kloza said.
"The Phillips 66 refinery is perhaps the most threatened facility," Kloza said. "Other refineries along the Delaware River are cutting back production runs, the way one might take the temperature down on water being boiled for pasta."
Kloza said that meant the refineries could return to full production quickly, provided that they escape flooding or other storm damage.
Other analysts said it was too soon to tell how prices might be affected, having nothing similar from the past for comparison with Hurricane Sandy.
"For motorists west of the Mississippi, there may be little change in prices because of the storm," said Patrick DeHaan, senior energy analyst for GasBuddy.com, which operates price-tracking websites. "But as you head east, especially in the states likely to be highly impacted, there may be disruptions at various levels."
Any fuel-supply disruptions would be mitigated by the fact that demand would be down because far fewer people are out driving during the storm, analysts said.
GasBuddy.com, for example, relies on about 500,000 price spotters to report on the highest and lowest prices they see, using a smartphone app. DeHaan said the number of price spotters posting Monday was down 53% in Delaware, 45% in New Jersey and 26% in New York.