Cost of gas here falls less than nationwide;

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Average price down 5 cents in S.D. County

San Diego Union-Tribune

California’s gasoline market is now reflecting its own tweak on the law of gravity: Fuel prices here are falling – but not nearly as fast as in the rest of the United States.

As motorists cut back on driving and inventories of motor fuel grow, gasoline prices nationally have fallen about 12 cents over the past week. The average nationwide price of regular is $2.73 per gallon.

However, California’s prices have fallen by just 6 cents over the week, bringing the average price of regular to $2.90 per gallon. In San Diego County, pump prices for regular gasoline now average about $2.94, or about 5 cents less than a week ago.

One year ago, nationwide prices averaged $2.04 a gallon, compared with $2.40 in California.

A spokeswoman for the Western States Petroleum Association says it is to be expected that prices would fall faster elsewhere because they rose faster outside the state after the powerful hurricanes Katrina and Rita hit the Gulf Coast.

Oil and gas production in that region has been slowly recovering.

“California’s gas prices did not rise at the rate that prices rose in other areas of the country that are more dependent on Gulf Coast production,” said Anita Mangels, a spokeswoman for the trade association.

While prices rose about 45 cents per gallon outside California during a narrow period after Katrina, they rose about 24 cents per gallon in California, Mangels said.

A consumer advocate said California’s prices are high because the state’s small group of refiners keeps supplies tight to maintain higher prices.

“The oil industry has always said the California market is an island,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “What they don’t say is that it’s an island they own and control.”

Court said that frequently when statewide gasoline prices moderate, the industry announces a spate of maintenance or equipment problems that curtail production, or companies export products to keep supplies tight.

The California Energy Commission yesterday reported that gasoline production here fell 5.3 percent from the previous week because of what the commission said was “planned maintenance and unexpected equipment problems” at several state refineries.

The commission does not release specific information on the refineries involved in production cutbacks.

The state energy monitor also noted that inventories of gasoline fell 11.4 percent from the previous week and 26 percent from this time last year.

The petroleum industry has long maintained that California’s gas market is largely unrelated to markets elsewhere because the special gasoline blend required here can be produced by only a handful of refineries outside the state.

That is a prime cause of the generally higher gasoline prices in California, the petroleum industry says, along with supply and demand factors.

On the New York Mercantile Exchange, oil prices dropped yesterday after the U.S. government reported crude and gasoline inventories rose sharply last week – a sign that oil supplies in the Gulf region are recovering from the hurricanes.

Hurricane Wilma, the strongest Atlantic storm on record, kept oil traders on edge, but forecasters expected the hurricane to bypass key Gulf Coast oil facilities.

Light, sweet crude for November delivery fell 79 cents to settle at $62.41 a barrel, after dropping to as low as $61.31 earlier in the day.

For the week ended Oct. 14, U.S. crude inventories rose by 5.6 million barrels from the previous week to 312.0 million barrels, according to the U.S. Department of Energy’s Energy Information Administration. The inventories are nearly 12 percent higher than year-ago levels.

Analysts had been expecting crude inventories to rise by only about 1.5 million barrels, and gasoline and distillate inventories to fall, according to a Dow Jones survey of analysts.

Gasoline inventories increased, however, by 2.9 million barrels to 195.7 million barrels. They remain 4 percent lower than a year ago.

The rise in gasoline stocks came as a surprise to analysts, who underestimated the improvement in U.S. refining capacity – which rose about 4 percent to 79.1 percent, according to the Energy Information Administration – and the amount of gasoline imports.
The Associated Press contributed to this report.

Contact the author, Craig Rose, at: (619) 293-1814; [email protected]

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