California gas prices are edging toward $3 per gallon, driven by climbing crude oil costs and a slowdown in fuel production.
State motorists are paying an average of $2.75 per gallon, a 23-cent rise since the beginning of the month. San Francisco customers paid the most -- an average of $2.93, according to data compiled Friday by AAA of Northern California. Nationwide, the average price at the pump was $2.30.
The cost of a fill-up will probably go higher, AAA spokesman Sean Comey said.
Pump prices have been clicking up daily by a penny or two for weeks, increases that can be traced in part to a Feb. 16 fire at a Valero refinery in Texas that caused a ripple effect in California, Arizona and Nevada, Comey said. Gas costs to station owners have jumped by about 50 cents per gallon, and retailers haven't yet passed the full amount on to consumers.
''That would suggest there's a fairly significant price increase headed to your local gas station,'' Comey said.
At the same time, production is undergoing a seasonal dip as refineries switch from making winter fuel to less-polluting summer formulas. The refiners often use the changeover to shut down units for routine maintenance.
Oil companies draw on inventories to meet their fuel supply contracts during these periods, but fires such as the one at Valero and maintenance snags can force them to buy in the spot market, said Suzanne Garfield of the California Energy Commission. That extra demand can ratchet up wholesale and retail prices, she said.
Fuel inventories are 2.5 million barrels lower than last year for California, Washington and Oregon, said Denton Cinquegrana, West Coast markets editor for the Oil Price Information Service. While that's not a huge percentage of the region's 31.7 million barrels of inventory, he said, West Coast supplies are always so close to demand that small changes can influence prices.
Cinquegrana said he expects gas prices to reach $3 per gallon in San Francisco in the next week or so, followed by statewide averages touching the $3 mark.
Whether those prices will be sustained depends in part on how fast refineries can finish their maintenance turnarounds, he said. Chevron's Richmond refinery probably would have been back in production by this time if not for a Jan. 15 fire in a crude oil unit, Cinquegrana said. A Chevron spokeswoman declined to comment on the refinery's status.
Meanwhile, crude oil traded above $60 Friday, continuing an upward trend linked to concerns over U.S. fuel supplies as well as conflict between Western nations and Iran over its development of nuclear technology.
''About one month ago, oil was trading in the low 50s,'' Comey said. By a rough benchmark, a $1 increase in the price of a barrel of oil translates into an increase of 2.5 cents per gallon of gas, he said.
But a host of factors can change that equation, including the behavior of consumers, Comey noted. Motorists can help curb price increases through relatively small changes in demand, such as telecommuting or taking public transportation to work once a week. They can also encourage competitive pricing by filling up at whatever station is cheapest that day.
source news : montereyherald.com
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