BP Indiana refinery
We mentioned it was coming a few days ago. Hundreds of you shared the story that we wrote, "West Coast Motorists: Prepare to get clobbered", and clobbered is what you're getting. In an update to that story, so far in the last week, prices have risen sharply. If you're not on the West Coast, skip down to the last paragraph to see what we expect outside this region.
Prices across California are seeing an average increase of 14-cents per gallon in the last week alone, with some cities seeing much bigger increases. Here are some of the increases compared to last Monday:
Santa Barbara, up 17c/gal
San Jose, up 14c/gal
San Fran, up 12c/gal
San Diego, up 13c/gal
Sacramento, up 13c/gal
Orange County, up 17c/gal
Oakland, up 15c/gal
Los Angeles, up 15c/gal
Prices across Oregon have increased an average of nearly 17-cents per gallon, while prices have climbed an average of 14-cents per gallon in Washington.
I've received e-mails from a few members on the West Coast, asking "why with oil prices dropping are prices rising here?!" The simple answer is two fold: don't give as much weight to crude oil prices- you aren't filling up with crude oil, you're filling up with gasoline. And that gasoline you're consuming must be taken from crude and refined. If refineries aren't processing enough oil, there won't be enough gasoline. That's the case here- supply has tumbled as refineries suffer various small blips, reducing the amount of gasoline available, thus causing some panic amongst traders, boosting the value of the gasoline that is available.
This is a temporary situation, but I don't yet fully know how many days or weeks it will last. Typically, a condition like this may work its way out in a few weeks, and I believe that to be the case here, but it bears watching. Will it get much worse? I think the worst of the increases are now behind you on the West Coast. That doesn't mean the increases will stop, it simply means that I believe increases won't continue to be 14-17c/gal like they were this last week.
For the rest of the country, things are shaping up for continued slowdown in gasoline prices, as oil prices start the week by continuing to shed value. At last check, oil prices are down to $94/bbl (WTI). It's important to note that this WTI "benchmark" is not what all refineries are consuming to make gasoline. Depending on geographic location, some refineries use oil that is cheaper and some use oil that is more expensive, depending on what is available in any given location.