California Gas Prices: An Omen for the Entire U.S.?

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The state of California is poised to break the record of the most expensive gallon of gasoline in the U.S. as prices soar above the previous record of $4.61 per gallon set in the summer of 2008.

Due to low inventories and compounded by problems at California refineries, the average price for a gallon of unleaded gasoline cost $4.49 on Thursday, according to AAA, and in San Francisco prices were a dime more expensive. As a result, gas stations are closing because they cannot procure any gasoline or because they cannot afford it at current prices.

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According to Reuters, a Costco Wholesales gas station in Marina del Rey was closed all day Thursday due to supply issues.

The problems at refineries are at the crux of the issue. Chevron’s (NYSE:CVX) 245,000 barrel-a-day refinery in Richmond, California, caught on fire in early August and has not yet returned to full production. Furthermore, a Chevron pipeline that transports crude oil from the south to the north has been shut down due to contamination in the oil. In southern California, two refineries owned by Phillips 66 (NYSE:PSX) are closed for scheduled maintenance, and an ExxonMobil (NYSE:XOM) refinery is recovering from a power outage that halted production.

Because of the gasoline shortage, Valero (NYSE:VLO) announced Thursday it had stopped selling gasoline into the California spot market. Valero, the largest refiner in the United States, operates two refineries in California with a combined capacity of 213,000 barrels a day and will continue to supply gasoline to its branded and licensed retail stations in the state.

The California Energy Commission said in a statement that it had increased monitoring of the gasoline market.

But while soaring gas prices are unfortunate, as Tom Kloza, chief oil analyst for Oil Price Information Service, told Reuters. “This is not something that is going to last for months. This is something that is going to last for days or weeks.”

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