Californians hit with unprecedented gasoline price jump

SAN FRANCISCO/LOS ANGELES Fri Oct 5, 2012 2:40pm EDT

1 of 2. Customers wait in line to purchase gas at a Costco membership store in Simi Valley, California October 5, 2012.

Credit: Reuters/Phil McCarten

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SAN FRANCISCO/LOS ANGELES (Reuters) - Californians awoke on Friday to yet another unprecedented spike in the price of gasoline that brought the one-week increase in the Golden State to a whopping 36 cents a gallon.

Prices dropped, however, on the wholesale market, possibly signaling the end to a price spike that has blindsided the state's car-loving consumers.

"It's insane," said Matt Hurd, 35, as he filled up at a San Francisco gas station near the Bay Bridge. "Especially with this thing," Hurd, who works in real estate, added, motioning toward his white SUV. "It's going to cost triple digits to fill it up."

The average retail price of gasoline rose 17 cents to $4.486 on Friday morning. The average price was $4.315 on Thursday and $4.131 a week ago, according to AAA data.

"We're in brand new territory," said Marie Montgomery, a spokeswoman for the Auto Club of Southern California. "It always seems like just when you've seen everything and you can't be shocked anymore, you are shocked again."

The average price is just 12 cents below the highest recorded statewide price of $4.61, which was reached in June of 2008.

In recent weeks, California refineries have dropped production in anticipation of switching over to a "winter blend" of gasoline next month.

At the same time, a power outage at Exxon Mobil Corp's Torrance, California refinery on Monday and a shutdown of the crude distillation unit at Chevron Corp's Richmond, California refinery aggravated the tight supplies.

Phillips 66 also said a planned maintenance was underway at its 120,200 barrel-per-day (bpd) San Francisco-area Rodeo refinery.

Western U.S. refiner Tesoro Corp halted sales on Monday to retailers that do not carry its brand name, according to market sources. Tesoro declined to discuss its wholesale operations.

Finally, Chevron said a pipeline that carries crude oil from the state's Central Valley to refineries in the San Francisco Bay area has been closed since mid-September.

"STARTING TO IMPROVE"

On Thursday, Golden State gas station operators asked air quality regulator the California Air Resources Board to allow early sale of winter-blend gasoline, the California Energy Commission said.

Gas stations in the nation's most populous state can begin selling winter-blend gasoline, which more easily releases smog-causing substances, on November 1. Until that date, only summer-blend gasoline, which is less likely to evaporate into smog causing chemicals, can be sold.

Some of the state's gas stations shut down due to tight supplies. About 14 of Costco Wholesale Corp's 40 Los Angeles-area stations were closed, according to Chief Financial Officer Richard Galanti, who added that five of those were expected to reopen on Friday.

"The situation is starting to improve already," he said.

In recent weeks, California refineries have dropped production in anticipation of switching over to a "winter blend" of gasoline next month.

In the Los Angeles area on Friday, the average price climbed 19 cents to $4.539 from $4.347 a day earlier. In San Francisco, prices climbed 16 cents overnight to $4.596.

But the differential for wholesale gasoline fell 55 cents on Friday in the Los Angeles spot market, according to a West Coast refined products trader said.

Gasoline blended to meet California's strict environmental standards traded at 90 cents a gallon over the November RBOB contract on the New York Mercantile Exchange, down 55 cents from where it traded on Thursday. California gasoline was later offered at 85 cents over the NYMEX.

"The squeeze is over, I guess," the trader said.

(Additional reporting by Erwin Seba in Houston; Editing by Leslie Gevirtz and Sofina Mirza-Reid)

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