warning Hi, we've moved to USCANNENBERGMEDIA.COM. Visit us there!

Neon Tommy - Annenberg digital news

Rising Oil Prices Sting West Coast Drivers

Meng Meng |
September 13, 2013 | 4:59 p.m. PDT

Staff Reporter

Meng Meng, Neontommy
Meng Meng, Neontommy

Retreating crude prices and well-stocked reserves have pushed gas prices down almost everywhere in the nation except California, where prices at the pump continue to climb as refinery problems trigger a tighter supply.  

Average retail gas prices in Los Angeles have risen 18 cents to nearly $4.02 a gallon in the past two weeks, according to real-time prices collected by Gasbuddy.com. The climbing pump prices are already rippling through the local economy, hitting companies that rely heavily on fuel to deliver their products. 

Steve Lopez, a Coca Cola delivery driver, said the soda giant is asking drivers like him to choose the shortest route to save oil.

Jose Corona, who operates a four-person electrical service company, said he plans to charge customers more once the price reaches $4.50 per gallon. Corona’s San Fernando Valley-based company provides professional electrical troubleshooting for McDonald’s and Taco Bell in South Los Angeles, Riverside County and Orange County. “I won’t be able to expand my company under the current price. And if it goes up higher, I will have a hard time this winter,” he said. 

For Angelenos, regular gas prices retreated gradually from the highest point of $4.32 per gallon in February, but bounced back at the end of summer, according to the Energy Information Administration’s Gasoline and Diesel Fuel Update.

Though national average pump prices fell in September, analysts said California might endure yet another spike because several big refineries such as Phillips 66, Shell and Valero have reported production problems, resulting in a gasoline shortage. 

Refinery issues led to a surge that pushed unleaded prices to nearly $5 per gallon last October, causing public outrage. 

“The same problems are to blame for the [recent] spike, and sudden supply tightness,” said Gasbuddy’s chief oil analyst, Tom Kloza. 

Taxi drivers were among those hit hardest. For Saraki Abi, a taxi driver from the Yellow Cab Co., a 50-cent per-gallon increase meant making $300 less every month, or working extra hours to earn more money. 

Most cab companies leased their cars to drivers for a set daily rate. If fuel prices rose, drivers had to cover the added costs. 

“If the fuel gets expensive, I will run at a higher cost,” said Abi. “And a one dollar increase would wipe me out of business.” 

Another analyst with Gasbuddy.com, Gregg Laskoski, said fuel prices often followed a seasonal pattern--- higher in spring when refineries produced the more expensive summer blend and lower in winter as drivers switched to the cheaper winter blend.

However, California often moved independently of the trend because the state required a unique blend, which couldn't be produced in other places. 

As of September 9, the U.S average gasoline prices declined by 2 cents, down 26 cents from a year ago. Cheaper fuel prices in autumn could be attributed to the slipping crude prices after Obama dismissed an immediate Syria war scenario by seeking diplomatic actions. 

Total fuel inventories, another gauge of gasoline prices, jumped by 1.7 million barrels last week to 217.6 million barrels today, 10 percent higher than a year ago, according to the petroleum status report from the Energy Information Administration.  

The EIA predicted prices would continue to drop in the following two quarters, according to the department's Short-Term Energy Outlook

Still, experts warned of possible fluctuations. 

“September is a critical month to watch, because possible hurricane in Mexico Gulf may disrupt crude oil production, thus spark an price spike,” Laskoski said.

Reach Meng Meng here.



Craig Gillespie directed this true story about "the most daring rescue mission in the history of the U.S. Coast Guard.”

Watch USC Annenberg Media's live State of the Union recap and analysis here.