CA Gas Prices Hit New Record Monday

Senator calls for investigation into possible market manipulation

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    NEWSLETTERS

    The price of gas in Sorrento Valley north of San Diego on Monday, October 8, 2012.

    Another day another record as the average price for a gallon of gas jumped one cent overnight to an average of $4.72/gallon of regular gasoline.

    In some San Diego locations, gas is priced at well over $5/gallon.

    Relief in Sight for Gas Prices

    [DGO] Relief in Sight for Gas Prices
    For the first time since gas prices went spinning out of control there is hope of reversing the trend. NBC 7's Steven Luke reports. (Published Monday, Oct 8, 2012)

    Statewide, the average was $4.668/gallon, up a little more than a penny over Sunday's record price.

    On Sunday, Gov. Jerry Brown stepped in to increase fuel supplies in the state, ordering regulators to allow refineries to make and sell cheaper winter-grade fuel earlier than is usually allowed.

    But it was not immediately clear on Monday how long it would take to bolster the state's reserves.

    "If they have assessed the situation accurately we should see Draconian price cuts and gas prices that are equal to the velocity of which they went up,” said Charles Langley with the Utility Consumers' Action Network. “Otherwise it's just greed."

    Sen. Dianne Feinstein has asked the Federal Trade Commission to investigate whether refineries caused the price spikes by deliberately manipulating the supply of gasoline in the state.

    Feinstein cited a story by the Reuters news service on the possibility that a type of market manipulation called a "short squeeze" was behind a recent drop in supply.

    "If there's a credible threat of a criminal investigation prices tend to drop fairly quickly," Langley said.

    California requires stations to sell a special type of gasoline in the summer that does not evaporate as quickly as the kind used during the cooler months, as a way to reduce smog. Normally, it is replaced by winter-grade gas at the end of October.

    But this year, just as wholesalers were letting their supplies of the summer formulation dwindle in anticipation of the switch to winter fuel at the end of the month, several other factors combined to put a serious crimp in the amount of gas available to local retailers.

    A power outage at a major Southern California Exxon refinery and fears of contamination in a Kern County pipeline drove supplies down further. To make matters worse, a Northern California refinery struck by fire earlier this year is still not back up to capacity.

    Last week, the price of a gallon of gasoline spiked as high as $5.79  thanks to a dramatic increase in the wholesale cost of fuel and panic-buying among gas station owners.

    Fuel was also harder to find at many locations, as some mom-and-pop retailers decided to sit out the price hikes and just shut down. Others looked for gasoline to sell, but couldn't find it.

    The Southern California Automobile Club has an online service that helps consumers find the least expensive gasoline in their area. Here is a link to that page.