Why Are Gas Prices Rising In California?

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Gas prices are expected to jump on Friday in southern California, but the rest of the country's increase should be more seasonal and incremental.

Southern California's gas prices are expected to jump as much as 37 cents per gallon on Friday, but it should not be a bellwether for the nation.

The prediction comes from Consumer Watchdog, a progressive advocacy organization in Santa Monica, founded by Harvey Rosenfield, and stems from problems with the delivery of summer-blend gasoline to stations in southern California.

Gas prices usually increase in the spring, as the Environmental Protection Agency requires refineries to produce less-evaporative gas after May 1, David Cook reported for The Christian Science Monitor. California's summer blend is state-specific, however, so the nation's transition should be less dramatic.

"The summer blend should not be responsible for more than a few pennies, maybe a dime,” Consumer Watchdog President Jamie Court said at a news conference, according to the Los Angeles Times.

The prediction of dramatic price increases in southern California is based mostly on the state market rather than the international flux of Saudi Arabia's record oil production, Iran's market ambitions, and the renewal of the domestic oil drilling in Texas and the Dakotas.

Although California's gas prices have been dropping alongside the nation's, they remain consistently higher, and Californians, with their wide-open spaces, sprawling cities, and largely nonexistent mass transit, have little choice but to accept them. California's average gas price is currently $2.34 per gallon, compared to $1.73 per gallon nationally, according to the American Automobile Association (AAA).

In July 2015, gas prices in Los Angeles jumped to $5 per gallon and the statewide average was 95 cents higher than the national average following problems at local refineries, Ivan Penn reported for the LA Times.

“This is a complete disconnect with the rest of the country,” Tom Kloza, the global head of energy analysis at the independent Oil Price Information Service, told the LA Times. “This really is illustrative of the fact that California is its own market.”

California's gas prices are about 70 cents per gallon higher purely because of fees and regulations specific to the state, according to the LA Times. The state's requirement to sell low-pollution blends that are produced only in California refineries – the main issue in this expected price hike – also forces costs up. The relatively small number of oil refineries in the state also means that any small disruption in supply increases prices accordingly.

"When four refiners control nearly 80 percent of the gasoline production and 75 percent of the stations in the area, this market is rigged for refiners’ profit and drivers’ pain," Mr. Court said in a news release.

This giant price rise is expected to remain concentrated in southern California, with even northern California experiencing only a quarter of the price spike, Gary Richards reported for the San Jose Mercury News.

"Northern Cal won't face the same spike," Court told the San Jose Mercury News. "The reason is the summer blend changeover took place according to schedule on Feb. 15 in the north but was delayed in the south for a week, and that caused this disruption."

Saudi Arabia's continuing resolve to keep oil production high will impact worldwide prices and should keep national gas prices generally low, unless the political situation changes dramatically. Prices will probably inch up during the spring though, as gas stations take advantage of warmer weather and Memorial Day travel.

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