A federal report showing tight gasoline supplies in California has sent the wholesale market into overdrive and could push Northern California gas prices as much as 20 cents a gallon higher over the next week, national gas price tracker GasBuddy.com said on Thursday.
Analysts say they were caught off guard by the spike and do not know how long it will last.
Patrick DeHaan, senior petroleum analyst for GasBuddy, said the wholesale market reaction followed the release of a Wednesday report by the U.S. Energy Information Administration, the agency that monitors energy data, including the supply of stocks of motor gasoline and gas-blending components.
DeHaan said the agency reported a gasoline inventory decline of more than 1 million barrels, and that overseas fuel imports to California had fallen to zero for the first time since March.
In Southern California, GasBuddy.com said at-the-pump costs could soar as much as 50 cents a gallon higher over the next week.
Allison Mac, a Los Angeles-based petroleum analyst for GasBuddy, said wholesale gas markets reacted immediately, spiking from as low as $2.22 at the start of the week to nearly $3.40 a gallon Thursday afternoon in Southern California. In Northern California, she said the wholesale spike over the same period went from about $2.25 to $2.49 a gallon.
Historically, retail gas prices ultimately react in direct proportion to fluctuations in wholesale costs. So far, the reaction has been small.
GasBuddy said the average retail price of gasoline in the Los Angeles area on Thursday was $3.58 a gallon, up 4 cents from Wednesday. In the Sacramento area, the average price on Thursday was $3.24 a gallon, up from $3.22 on Wednesday.
Even so, that was a break in a weekslong pattern.
Following a burst of statewide gas price increases in the spring – which analysts tied to multiple disruptions at California refineries producing the state’s specifically mandated blends – gasoline costs have been steadily decreasing since mid-May.
During the recent run of price declines, energy analysts cited steady gas supplies and a lack of disruptions at California refineries.
Consequently, analyst Mac said this week’s federal report “was a bit of a surprise.” Asked how gas supplies fell off the table amid a period of seemingly stable supplies, she said: “That’s what we’re trying to figure out as well. The market reacted the way it did after this report came out. We’re all a little confused.”
Mac said it’s difficult to predict the duration of the expected price increases as “there’s no immediate solution to supply relief.”