California Refiners Ration Gasoline as Prices Soar to Record

Thursday, 04 Oct 2012 10:35 PM

 

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Exxon Mobil Corp. and Valero Energy Corp. are rationing fuel deliveries to customers in California as refinery outages cut into the state’s supplies, driving pump prices toward record highs.

Valero halted spot sales of gasoline in Southern California and is allocating the rest of deliveries to customers. Exxon is also rationing fuel to customers at West Coast terminals. Retail prices in California jumped to $4.315 a gallon Oct. 3, according to AAA, the nation’s biggest motoring organization.

The shortage caused Los Angeles-area gasoline station owners, including Costco Wholesale Corp., to run out of supplies, shut pumps and, in some cases, charge their highest prices ever. Spot gasoline in California, already home to some of the most expensive fuel in the nation because of state blending requirements, has surged $1 a gallon this week to a record.

“We’re really sort of shell-shocked,” said Tom Robinson, president of Santa Clara, California-based Robinson Oil Corp., which operates 34 Rotten Robbie convenience stores. “If you’ve been in California long enough, you know how volatile our market can be. But to see prices go up $1 a gallon since Monday -- I’ve never seen that before.”

Prices Jump

Spot California-blend, or Carbob, gasoline in Los Angeles jumped 30 cents to $1.45 a gallon over New York Mercantile Exchange futures Wednesday, data compiled by Bloomberg show. That’s the highest level since at least November 2007, when Bloomberg began publishing prices there.

Pump prices in California Oct. 3 were 53.1 cents more than the national average of $3.784, AAA data show. In Los Angeles, the price was $4.347. The record high for California is $4.61 a gallon, and in Los Angeles $4.626.

Robinson said by phone that his stations were charging $4.599 a gallon for unleaded gasoline, the highest price the company’s ever posted. His stations are among many receiving allocated deliveries from suppliers, he said.

“There’s no doubt” the company’s prices will climb higher, he said.

Low-P, a gasoline station in Calabasas, California, 30 miles west of Los Angeles, shut pumps Oct. 2 after running out of gasoline.

The station received a fuel delivery yesterday that will allow it to reopen, while charging almost $6 a gallon, John Ravi, the station’s owner, said by phone. The shipment should keep the store open for another week, Ravi said.

Costco Supply

Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline Oct. 3 and was selling premium fuel at the price of regular.

The gasoline shortage “feels like a hurricane to me, but it’s the West Coast,” Jeff Cole, Costco’s vice president of gasoline, said by telephone Oct. 3. “We’re obviously extremely disheartened that we are unable to do this, and we’re pulling fuel from all corners of California to fix this.”

Exxon’s Torrance refinery is restoring operations after losing power Oct. 1. Phillips 66 is scheduled to perform work on gasoline-making units at its two California refineries this month, two people with knowledge of the schedules said. A Chevron Corp. pipeline that delivers crude to Northern California refineries was also shut last month because of elevated levels of chloride in the oil.

“Product supply in California has tightened, especially in Southern California, due to refinery outages,” Bill Day, a Valero spokesman at the company’s headquarters in San Antonio, said by e-mail.

San Francisco

Carbob in San Francisco surged 30 cents yesterday to $1.40 a gallon over futures, also the highest level since at least 2007.

The California Independent Oil Marketers Association, a Sacramento-based group that represents wholesale and retail fuel marketers, asked the state Oct. 3 to expedite a waiver that would allow refiners to produce and sell winter-grade fuel, Jay McKeeman, a spokesman for the association, said by telephone that day.

California’s summer-blend fuel requirements are in effect in Southern California until Oct. 31. The Reid Vapor Pressure, or RVP, limits are lifted in other areas of the state as early as Sept. 30.

The state Air Resources Board and Energy Commission are evaluating fuel supplies and haven’t decided on the waiver, Dave Clegern, a spokesman for the air board in Sacramento, said by e-mail.

© Copyright 2014 Bloomberg News. All rights reserved.

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