Saturday, October 6, 2012

Gravity's Rainbow: California Gas Prices Necessarily Skyrocket

California's gas prices have been rising steeply the past few days with the stations in my neighborhood changing the prices every few hours. Pretty soon we'll need to be carrying Weimar-esque barrels full of cash just to keep up at the pump:
Gasoline at the pump gained 8.3 cents to $4.315 a gallon in California yesterday, according to, 53.1 cents more than the national average of $3.784. In Los Angeles the price was $4.347. Gasoline futures for November delivery on the Nymex rose 14.34 cents to settle at $2.9429 a gallon, after falling yesterday to a 10-week low. Retail price movements tend to lag behind those of futures. 
“Product supply in California has tightened, especially in Southern California, due to refinery outages,” Bill Day, a Valero spokesman at the company’s headquarters in San Antonio, said by e-mail. 
Exxon’s Torrance refinery is restoring operations after losing power Oct. 1. Phillips 66 (PSX) is scheduled to perform work on gasoline-making units at its two California refineries this month, two people with knowledge of the schedules said. A Chevron Corp. (CVX) pipeline that delivers crude to Northern California refineries was also shut last month due to elevated levels of chloride in the oil.
What's amusing is that now that there are no Republicans in office whom hustling leftists can blame for the law of supply and demand, people are being up front about the cause of CA's first-in-the-nation spike: CA's special gas blend is produced by a relative handful of refineries, so trouble at even a couple of them will cause pain at the pump.
The price increase struck at a time of year drivers usually find themselves paying less for fuel, not more. Gas prices typically peak in the summer and drop after Labor Day, as vacation season draws to a close. That's happening in many states right now. 
But in California, gasoline supplies have been unusually tight in recent months. On Aug. 6, a fire swept through Chevron's Richmond refinery, seriously damaging the plant's main unit for processing crude oil. 
Monday's power outage at the Torrance refinery shut down some of the plant's units and slowed others. At the same time, two other California refineries were cutting production for planned maintenance. 
And all the state's refineries were preparing to switch the type of fuel they make. California requires refineries to sell a special pollution-fighting gasoline blend during summer months. They switch to the winter blend at the start of November. 
Exxon's Torrance refinery makes about 10 percent of the state's gasoline. So when the power outage struck, traders in the wholesale gasoline market started bidding up prices. In the Bay Area, prices on the wholesale spot market rose from $3.64 per gallon Monday to $4.34 Thursday. With the refinery's return on Friday, the spot price for gas fell back to $3.68. 
Sudden changes in the spot market, where people buy large amounts of gas for immediate delivery, usually take several days to filter through to the retail level. So drivers can probably expect a few more days of increases.
I'm sure I don't have to tell you that our "special blend" is not there to make sure our cars have higher performance so we can win our next impromptu drag race. Instead, the blend is there to Save The Environment, only the blend is apparently out of date, so no other eco-Left states are using it. That means (1) we can't bring in supplies from out-of-state (2) we can't use non-"special" gas because it's The Law and (3) CA only has maybe a dozen refinieries with no prospect of any other coming on-line before Hell freezes over because they are bad for the environment. That's the system we've got. I certainly don't support it, but a majority of the state's voters have installed politicians who created this mess. Anyone who complains about gas prices now should probably have his license and voting privileges taken away.

1 comment:

  1. Yes, gas is bad for the environment, so lefties claim. Of course, people are bad for the environment too, maybe that explains why the left is so anti-human. We should all die and make the world safe for squirrels!