California gas prices $0.95 above national averages
Nationally, the average price of a gallon of gas is just $2.77. But the average price in California is $3.72, with average prices in the L.A. area even higher at $4.05/gal, the Automobile Club of Southern California told the LA Times.
Problems with refining, along with California’s stricter rules for gasoline, have sent consumer gasoline prices soaring. The Tesoro Corp. (ticker: TSO) refinery in Carson recently reduced its refining capacity to perform maintenance, following a decision in February to idle its refinery in Martinez after union walkouts. An ExxonMobil (ticker: XOM) refinery also had to reduce its output following an incident that damaged an air pollution monitoring unit.
“This is a complete disconnect with the rest of the country,” said Tom Kloza, global head of energy analysis for the independent Oil Price Information Service. “This really is illustrative of the fact that California is its own market.”
California gasoline prices are normally about $0.70/gal higher than in the rest of the country just from taxes and other fees, according to the LA Times. The state requires that motor vehicles use a special, low-pollution blend that few refiners outside the state are able to produce, making the effect of the closed refineries disproportionately large on regional gas prices.
The rest of the U.S. sees lowest gasoline prices in six years
While California drivers get hammered by high gas prices, the rest of the U.S. is expecting average retail gasoline prices for this summer (April through September) to average $2.67/gal. When adjusted for inflation, anticipated gasoline prices for this summer will be the lowest since 2009, according to the Energy Information Administration (EIA).
Travel and gasoline consumption are expected to be higher this summer compared to levels in 2014, according to the EIA. Gasoline consumption is expected to increase by 194 MBOPD, up 2.1% from last summer.
Vehicle miles traveled is expected to be up 2.2% from the summer of last year, the largest year-over-year increase in 11 years. With disposable income 3.6% higher than last summer in real dollars (adjusted for inflation), higher employment, stronger consumer confidence and low oil prices, the EIA expects U.S. drivers to take to the roads in greater numbers.
This summer should also see a large draw on motor gasoline and gasoline blending components, according to the EIA. Primary inventories of finished motor gasoline and gasoline blending components began the summer season 10.7 MMBO above the five-year average, and are expected to end the season 3.7 MMBO above the average. The projected 14.3 MMBO draw is 70% larger than last year’s draw of 8.4 MMBO, which the EIA anticipates will translate into a 62 MBOPD decline in the net imports of gasoline and blending components.
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