Thursday, September 26, 2019

California’s Drivers May Soon Pay $4 a Gallon for Gasoline

California drivers may soon pay $4 a gallon at the pump after refinery upsets pushed up the wholesale market in San Francisco to the strongest level in almost seven years.

San Francisco spot gasoline traded at its highest premium to futures since 2012 and Los Angeles was the highest in almost four years on Tuesday. An alkylation unit at Valero Energy Corp.’s Benicia refinery, which makes high-octane gasoline, went down over the weekend, according to Genscape Inc. A failed unit restart at Chevron Corp.’s El Segundo refinery and a crude unit upset at PBF Energy Inc.’s Torrance facility, both near Los Angeles, also boosted prices.

California fuel prices are typically volatile, as the state has tighter emissions standards, which make its fuel more expensive to produce. Also, the West Coast isn’t connected by pipeline to the bulk of U.S. refineries along the Gulf Coast, so when local refineries aren’t able to churn out enough fuel, suppliers need to pay much higher prices to draw in cargoes from Europe or Asia.

GasBuddy senior petroleum analyst Patrick DeHaan said $4-a-gallon gasoline could be ahead for California drivers. The San Francisco average price Tuesday was $3.89 per gallon and rose to $3.94 a gallon on Wednesday, according to AAA.

California-blend gasoline in both cities jumped 20 cents a gallon Tuesday, according to data compiled by Bloomberg, bringing San Francisco to the highest level since the period following a fire in 2012 at Chevron’s Richmond refinery, the second-biggest in the state. It typically takes a few days for increases in the wholesale, or spot market, to filter down to retail stations.

The refinery problems come with supplies in the region running tight. West Coast stockpiles are down 4.2 million barrels since late July, according to U.S. Energy Information Administration data.
(Updates last paragraph with latest supply data from EIA.)

To contact the reporter on this story: Jeffrey Bair in Houston at

To contact the editors responsible for this story: David Marino at, Catherine Traywick, Mike Jeffers

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