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CALIFORNIA BUSINESS MINUTE
CA Gas
09-10-09
Hi, I am Tim Johnson and welcome to the California Business Minute.
Supply and demand typically works until it comes to calculating the price
for gasoline in the Golden State.
California usually has the highest priced gas in the Continental US caused
by strict environmental standards resulting in the nation’s cleanest burning
gas but with just over a dozen refineries to produce it for the most populous
state, it comes at a premium.
California's average price of a gallon of regular gasoline rose 6.2 cents to
$3.099 according to the Energy Department. The latest price topped the earlier
high for the year of $3.047 recorded on August 17.
Conversely, gasoline prices have been easing nationally because of sluggish
demand. The average price was $2.588, down 2.5 cents, according to the Energy
Department‘s weekly survey of U.S. filling stations. The cheapest price was
in Texas, where gasoline sold for an average $2.404 a gallon.
Analysts attribute California's price surge to a supply squeeze in the state.
Production of reformulated California gasoline fell to 5.8 million barrels in
the most recently reported week, ended Aug. 28, about a million barrels below
the rate during the same week last year, according to the California Energy
Commission.
Some of the decline comes from maintenance shutdowns by two Northern California
refineries. In addition, refiners have been trimming output to boost profits,
said Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall,
N.J., who predicts that California gasoline could reach as high as $3.25 a gallon.
"This is what happens when you have refiners who do not want a repeat of last year,
when prices and their profits collapsed. They are very intent on not over-producing,”
Kloza said in a Los Angeles Times article.
This could also slow the California economy further as the summer comes to an end
and Californians find it hard to make ends meet due to the lack of employment.
I am Tim Johnson and this has been the California Business Minute.
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