Gas prices hit an all-time high in California on Saturday, hitting $4.614. The unprecedented surge in pump prices in the west coast state were propelled by a perfect storm of factors that drove inventories in the area down so far that they could hit historic lows.
California’s average cost for a gallon of gas edged past the previous record of $4.61, which was set in 2008, per figures from AAA, reports Reuters.
Some locations in California reported topping $5 per gallon, including in one downtown Los Angeles gas station that was selling regular grade gas at $5.49 per gallon. Just one week ago, average prices in the state were $4.145, according to AAA’s data.
The abrupt spike in price has shocked the residents of California, who love driving their cars. It has also left some retailers in Los Angeles scrambling for supplies. Signs have even emerged saying that the run-up in prices will end soon, but motorists are thinking twice before they head out on the road.
A series of events have occurred that limited supplies in the area, causing gas inventories in the region to fall to their third-lowest level in the past 20 years, according to government data.
A fire closed Chevron Corporation’s refinery in Richmond, California and a Chevron pipeline carrying crude oil from the Central Valley area to refineries to conduct in the San Francisco Bay area was also closed in mid-September.
Most recently, Phillips 66 closed two plants so that they could conduct planned maintenance. A power outage also hit Exxon Mobil Corp’s refinery in Torrance on Monday, causing operations to be disrupted for days.
Fox News notes that Saturday’s price was the highest in the nation, even passing Hawaii earlier this week as the state with the most expensive fuel. Nancy Garcia, 34, stated while filling her Honda Accord at a Chevron, “I seriously thought it was a mistake on the sign when we pulled in.” But it wasn’t and she paid $4.65 per gallon for regular grade. Garcia stated that she couldn’t fill her tank all the way, because of the high prices.
Saturday’s national average was around $3.81, which is the highest ever for this time of year. Unlike in California, however, gas prices in many other states have started decreasing. Gas prices are based on wholesale prices. When supplies drop, wholesale prices rise.
This forces distributors and station owners to pay more to fill up their station’s tanks. In turn, they raise their prices based on how much they paid for their current inventory, as well as how much they think they will have to pay for the next shipment, and also how much competitors are charging.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, believes that the average price of gas in California could peak at $4.85. DeHaan stated:
“There is some relief in sight but probably not for a couple of days. Early next week is when we may see some more significant declines … but at retail prices, prices may climb for the next two to three days before they start to come down.”
Until then, drivers in California will likely have to play the highest gas prices in the nation.