California, all of a sudden, hits $5 gas
California discovers how close it lives to a tipping point when refinery problems combine to create a sudden gas shortage and a spike in prices.
We’re getting closer and closer to $5 a gallon gas here in California. Just last night, the price of a gallon went up another 17 cents. It can be a little crazy-making. Especially for a car city like Los Angeles, where you can almost hear the whimpers as you drive down the street.
But this price-hike-around, it’s not just drivers making pitiful sounds. Some independent gas station owners are throwing up their hands.
“If the situation is going to stay like this, I think I’m going to close down,” says Sam Krikorian, owner of Quality Auto Repair in North Hollywood. “If not today, then tomorrow morning sometime.” Like a lot of independent gas station owners, he doesn’t have long-term contracts for his gas. “Today,” he says, “if I want to order the fuel, it’s going to be like $5.05, plus the taxes which is going to be over $5.50 a gallon.” And that’s for regular.
He’d rather just lock things up until prices come back down.
The good news: prices should fall in the relatively near future. The bad news: that future isn’t tomorrow.
“They’re up the creek without a paddle,” says petroleum industry analyst Bob van der Valk.
There are a few reasons for California’s paddle-less boat. For one, the state has its own gas formulations and it’s the time of year refiners move from the summer blend to the winter blend. “The switch over takes place on November 1,” says van der Valk, “and unfortunately we ran out of the summer blend last week.”
Two California refineries were out of commission. Another down for maintenance. There’s a closed pipeline.
van der Valk guesses it could add up to $6 a gallon gas by the end of next week.
Or not. But while California’s gas market has always been tight, now we all know just how tight.
Back at Quality Auto Repair, Sam Krikorian tries to find an upside. “I don’ t remember what was the last time I took a vacation, maybe five to seven years ago,” he laughs, “I think it’s the best time now for me to get a break.”
As long as he doesn’t have to drive.