Pump prices flirt with $3;

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Sacramento area sees jump of 35 cents a gallon in last month.

Sacramento Bee

Jose Granados shrugged and kept pumping. The price of gas was back over $3, but he had no choice but to pay it.

“I have to work,” he said.

The landscaping worker was filling up his pickup at $3.06 a gallon Thursday at a Conoco Phillips 76 station in Sacramento, one of several in the region where gas has surged past the $3 mark.

The region’s average was actually $2.94 a gallon, according to AAA, but experts say it’s only a matter of time before $3 becomes the norm. Prices in Sacramento have jumped 35 cents in a month and are poised to hit $3 for the third time in less than two years.

Industry consultant David Hackett said a fresh round of refinery problems is a big part of the reason why. How high prices will go “is a function of when the refineries come back,” he said.

Prices hit an all-time high of $3.27 in the Sacramento area last May. By late fall, they had plunged to less than $2.50.

Prices have shot up in the past few weeks, thanks to higher crude oil costs and a refinery fire Feb. 16 in Texas, which curbed shipments to Arizona and drew supplies away from Southern California. For the week ending last Friday, the most recent data available, California refinery production was 6 percent lower than a year ago, according to the California Energy Commission.

In the past week, things have gotten even tighter. Tesoro Corp.’s refinery in Martinez encountered a mechanical problem that delayed the resumption of operations after a planned maintenance shutdown. In addition, at least two refineries suffered production problems when a glitch in a transmission line cut power Sunday in parts of Southern California. Although the power outage was remedied quickly, it takes time for the plants to get back to full production, Hackett said.

The power outage explanation drew scoffs from the Foundation for Taxpayer and Consumer Rights in Santa Monica, which said the real blame lies with the refineries. The foundation said the refiners are guilty of a “deliberate shrinking of refinery capacity,” making the market vulnerable to the slightest hiccups.

Oil industry executives said they’ve done all they can to increase production capacity but have been thwarted by red tape and California environmental laws.

The California gas market is clearly among the tightest in the country. Industry officials say the state’s unique fuel formulas are difficult to duplicate, so when California’s own refineries suffer problems it takes time to import replacement supplies from elsewhere. That makes prices more volatile here than in most other states.

Among the 25 metropolitan areas in California surveyed daily by AAA, the average price topped $3 in seven areas. San Francisco had the most expensive gas in the state, at $3.12. The statewide average was $2.96, 45 cents above the U.S. average.

If there was any good news for motorists, it was that the price of crude apparently has stabilized after jumping about $10 a barrel since January. Prices fell 18 cents Thursday to close at $61.64 on the New York Mercantile Exchange.

Consumer Watchdog
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