Will California gasoline prices top $5 soon? Here’s what you can expect, experts say
Get ready for $5 a gallon gasoline in California, probably as soon as next month.
That’s what experts are forecasting, as refinery shutdowns, increased demand and a return to more expensive warm weather blend gasoline help push prices higher.
An average gallon of regular gasoline in California Monday was $4.65, up 23 cents from a month ago. The Sacramento area’s average Monday was $4.56, up 28 cents from a month ago.
Those numbers are still well above the national average of $3.42 Monday.
California’s prices are the second highest in the country, trailing only Hawaii’s $4.88.
Patrick De Haan, head of petroleum analysis for GasBuddy, which tracks gasoline prices, said there’s a “strong likelihood” of $5 a gallon gas in California by March or April.
Gokce Soydemir, another expert, had similar views. “Given the travel demand, the prices may rise above $5 (a gallon) in summer,” said the Foster Farms endowed professor of business economics at California State University, Stanislaus.
He explained that “gas demand has risen and the cold weather affected oil refineries so we will not be seeing a fall in prices in the next couple of weeks. As spring and summer come closer, this picture is not likely to differ.”
As summer goes on, though, prices should stabilize and could even drop as supplies of gasoline increase.
Warmer areas of the state, notably Southern California, should see prices go up as a result in a few weeks, and other areas will follow. De Haan said the Central Valley is likely to see the price increases later than others.
Why does gas cost so much?
The state’s steep price is a result of a variety of factors; most are difficult to control. Consumer demand is important, as though the economy is not booming, it continues to grow.
Some influences in the state are the same as they are nationally.
Sanjay Varshney, professor of finance at California State University, Sacramento, cited increased demand in China, which is beginning to reopen after COVID-induced shutdowns.
In this country, the price of crude oil pushes prices, though it’s been fairly steady recently at between $75 and $85 a barrel.
Factors unique to California include refinery shutdowns for maintenance or other reasons, which kept prices high last fall and are again a factor, De Haan said.
Some areas of the state have already begun the conversion from winter fuel to summer fuel. The summer product is designed to reduce pollution during warmer weather, and tends to be more costly.
California refineries produce a cleaner product that meets state environmental regulations. That means the state’s refineries operate at or near full capacity because of strong demand and a lack of interstate pipelines that could bring products into California.
“When unplanned refinery outages occur, the lack of (California Reformulated Gasoline) deliveries available by interstate pipelines means replacement supplies…come in by marine tanker from out-of-state U.S. refineries or from other countries,” said the federal Energy Information Administration.
“It can take several weeks to find and bring replacement motor gasoline from overseas that meets California’s unique specifications,” the agency said in an analysis of California energy.
The experts don’t see California prices approaching the June 2022 state record of $6.43 a gallon. Fresno got as high as $6.36, while Sacramento peaked at $6.44.
“It’s improbable but not impossible,” De Haan said of $6 a gallon gasoline this year.”You’d have to get a flurry of refinery kinks.”
This story was originally published February 13, 2023 at 12:51 PM with the headline "Will California gasoline prices top $5 soon? Here’s what you can expect, experts say."
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