Maintenance concerns at four California oil refineries sent gasoline prices on a monthlong surge, with prices for regular unleaded spiking to their highest levels in five years over the past week.
But experts believe the prices will begin to fall soon.
In Fresno and the central San Joaquin Valley, AAA Gas Prices reported that the average pump price climbed to above $4.10 per gallon in recent days, settling Monday at $4.11 in Fresno, $4.12 in Madera and $4.10 in Kings, Merced and Tulare counties.
California has 27 operating refineries producing gasoline for the state, said Patrick DeHaan, head of petroleum analysis for GasBuddy.com. That’s down from 55 refineries in 1983, so there are fewer facilities to generate fuel for the growing number of drivers in the state.
The recent spike, DeHaan told The Bee on Monday, boils down to two words: refinery issues.
“Breakdowns happen, and even brand new refineries are not going to run perfectly,” he said. “These were all relatively minor issues that last a week or two at most. But when they go down, it serves as a catalyst for these spikes you’re seeing in California.”
Now, DeHaan said, those refineries are back at full production, “and prices have plateaued, basically unchanged for the last four days.” He predicted that over the next few days, California and the Valley will “start to see downward momentum kick in, maybe a penny or so (per day) over the next several weeks.”
“I think prices will probably drop by 45 to 50 cents a gallon and basically undo all the damage we’ve seen” over the past month, he added.
The past month has been reminiscent of another surge in the spring that hit drivers in the wallet, as the state switched to a cleaner summer blend of fuel at the same time that refineries had maintenance problems.
California is a complicated gasoline market that is prone to more volatility in fuel prices. “California has created this unique environment that allows gas prices to explode because California has isolated itself in several ways,” DeHaan said.
The state’s Air Resources Board has a lower carbon standard for gasoline than most of the rest of the country. The state also mandates using a cleaner – and more expensive – summer fuel blend for several weeks longer than most of the U.S.
“Basically you have a very unique type of gasoline that only these 27 refineries produce, but there’s a high level of taxes, a low carbon standard, and California doesn’t enjoy the interconnectedness to gasoline supplies across the country, so all of that adds up to an explosive background for gasoline prices.”