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 jbair4@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers
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