Calif. gas prices hit all-time high

Associated Press Modified: October 7, 2012 at 3:30 am •  Published: October 7, 2012
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When supplies drop, wholesale prices rise. Then distributors and station owners have to pay more to fill up their station's tanks. They then raise their prices based on how much they paid for their current inventory, how much they think they will have to pay for their next shipment, and, how much their competitors are charging.

A web of refinery and transmission problems is to blame, analysts said. The situation is compounded by a California pollution law that requires a special blend of cleaner-burning gasoline from April to October, said Denton Cinquegrana, executive editor of the Oil Price Information Service, which helps AAA compile its price survey.

"We use the phrase 'the perfect storm,' and you know what, this current one makes those other perfect storms look like a drizzle. I don't want to scare anyone, but this is a big problem," Cinquegrana said. "Run-outs are happening left and right."

Among the recent disruptions, an Aug. 6 fire at a Chevron Corp. refinery in Richmond that left one of the region's largest refineries producing at a reduced capacity, and a Chevron pipeline that moves crude oil to Northern California also was shut down.

There was some good news, however.

Exxon Mobil Corp. said a refinery in Torrance returned to normal operations Friday after the power failure Monday disrupted production for most of the week. State officials said with the refinery coming back online, prices should start falling.

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Contributing to this report were AP writers Sandy Shore in Denver, Gillian Flaccus in Los Angeles, John Marshall in San Francisco and Gosia Wozniacka in Fresno.