Gasoline prices are on the rise nationwide, but for California drivers, they've skyrocketed in a short amount of time.
The average price in the Golden State on Friday was $5.27 per gallon, up $0.23 from a week ago, according to AAA data. Meanwhile, the national average price on Friday was $3.54 per gallon, up $0.04 in the same period.
Tom Kloza, global head of energy analysis at OPIS, said oil refineries are the main culprit behind California's price hikes, with the Bay Area's important Phillips 66 refinery shutting down gasoline production in favor of renewable diesel. Point out that it is a local problem.
“Given scheduled maintenance at two key refineries in May and the usual speculative buying trend in global markets in the second quarter, wholesale prices have increased significantly,” he said. “There is,” he said.
Closer estimates that gasoline in San Francisco, before taxes and other costs, is sold at a premium of about $60 a barrel over current oil levels.
On Friday, West Texas Intermediate (CL=F) futures rose above $86 per barrel, and international benchmark Brent crude oil (BZ=F) prices settled above $91 per barrel.
“Anyone who studies oil history knows that these relationships don't last long,” Kloza said. “A correction is looming in gasoline and possibly crude oil, and will almost certainly occur in the next 30 days.”
Last year, California passed the Gas Price Gouging and Transparency Act, which aims to rein in refinery margins. Regulators are expected to meet next week to work out the details of certain rules.
said Andy Lipow, president of Lipow Oil Associates. legal The requirement “could cause some gasoline importers to cease operations in the state, requiring supply from outside the state and potentially worsening the supply situation.”
Gasoline in California has traditionally been more expensive than in other regions because the state's special blending requirements increase production costs. California also imposes high taxes and fees related to efforts to reduce carbon emissions.
U.S. gasoline inventories have been falling in recent weeks, indicating strong demand across the country.
Regina Mayer, global head of clients and markets at KPMG, recently told Yahoo Finance: “We're entering the summer driving season, and we expect gasoline demand to continue to increase. So in the short term, Prices will go up,” he said.
But the mayor expects demand to begin to be destroyed if prices get too high.
“We understand that people need to drive to and from work, pick up their kids, take them to school, etc. But when gas prices reach these levels; You might think twice about driving during the summer vacation.''They think it's unacceptable,'' the mayor said.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
