As Gas Prices Soar and Stations Run Out of Fuel, Refiners Ration Deliveries

Even Costco shuts down some pumps, although there's plenty of gas at the mass-retailer's Burbank store.

ExxonMobil and Valero are rationing fuel deliveries in California Friday as refinery outages cut into the state’s supplies, driving pump prices toward record highs, according to BloombergBusinessweek.

"Valero halted spot sales of gasoline in Southern California and is allocating the rest of its deliveries to customers," says the Bloomberg report. "Exxon is also rationing fuel to buyers at West Coast terminals."

The average price of a gallon of self-serve regular gasoline in Los Angeles County recorded what is believed to be its largest single-day increase Friday, rising 19.2 cents to $4.539—its highest amount since July 12, 2008.

Costco stores in Northridge and Simi Valley have shut down their gasoline pumps, and independent stations are turning away customers.

Burbank Costco Still Flush

The Costco store in Burbank, however, still has plenty of gas, according to an administrative employee. "We have a shipment that came in before all this went down," she told Eagle Rock Patch, referring to the mass-retailer's dry pumps elsewhere.

The Costco on Los Feliz Boulevard in Atwater Village—the closest Costco store to Eagle Rock and Highland Park—does not sell gas, making Burbank the best bet for competitively priced gas in the region.

Friday's price per gallon of regular gas at the Burbank Costco is $4.45, and $4.65 for premium gas. But "it's been going up every day," said Josè Garcia, an employee at the Costco gas station in Burbank. "Last week, we were about $4 a gallon."

At the M&J Shell Service Station on the corner of Eagle Rock Boulevard and El Paso Drive, Friday's price of a gallon of regular gas is $4.67, up from about $4.32 over the past few days, Ricardo Rodriguez, a cashier at the gas station said.

The gas station, which attracts a substantial amount of through traffic going into Mount Washington and Highland Park via El Paso, has enough supplies of gas, at least for now, Rodriguez said.

What's Behind the Price Rise

A combination of West Coast refinery failures and a shortage of summer-formulated fuel have put the squeeze on retailers just as the average price of a gallon of self-serve regular in Los Angeles County recorded its largest daily increase since at least 2008.

Some independent stations in Calabasas ran out of unleaded fuel on Oct. 2, according to Bloomberg. And the wholesale price stations pay has risen by as much as 73 cents in some markets over the past week.

“Right now, gas stations are trying to wean out what they have of the 'summer blend,'" Bob van der Valk, an independent petroleum industry analyst, told KNX radio. "There is absolutely none available.”

Refineries have already switched over to “winter blend,” which burns cleaner at cooler temperatures, but can't be sold in California because of clean-air rules until after Halloween. 

Van der Valk said a refinery fire in Richmond in September and a power failure at the ExxonMobil refinery in Torrance has squeezed the availability of fuel.

“Costco just ran out of gasoline even though they’re being supplied by Chevron,” he said. “Apparently, they have a limit on that, and then they’ll buy on the open market at whatever price they can get.”

The average price has increased by more than 1 cent on each of the past seven days, including 8.8 cents on Thursday and 5.8 cents on Wednesday. It is now  40.3 cents more than a week ago, 36.4 cents higher than a month ago and 71.5 cents greater than at this time last year, according to figures from the AAA and Oil Price Information Service.

The record price is $4.626, set on June 21, 2008.

"Reportedly in recent weeks, local refineries were dropping production levels, exporting supply to Mexico and other countries, and allowing inventory to dwindle in anticipation of switching over to production of winter blend gasoline, then a refinery power outage and a pipeline incident occurred on Monday that sent wholesale markets into a panic about the adequacy of California fuel supplies," said Jeffrey Spring of the Automobile Club of Southern California.

"California is ground zero for one of the most dramatic price spikes in a while," Tom Kloza, chief analyst at the Oil Price Information Service, told KTLA5.

Click here for local gasoline prices.

— City News Service contributed to this report.

Marcus October 05, 2012 at 09:03 PM
The average US gas price in July 2008 was $4.15. By the time of the election it had dropped down to $1.72. Of course spikes in prices are unpleasant, but we have to remember they are cyclical because of summer to winter transitions, and oil processing problems elsewhere. This morning gas was $4.89 at Mobil for that fancy Premium stuff. Let's keep that quiet from everyone else.
bbkong October 05, 2012 at 10:17 PM
Obviously this is all Obama's fault. ;) Fortunately this will have passed before I need to fill up again, which by my estimate will be sometime around Thanksgiving.
Mark October 06, 2012 at 01:11 AM
I do not find it at all believable that all these various refinery issues happened the very same week. Does this sound exactly like the gaming of the electricity market in California some years back? Even their explanations as stated sound unbelievable -- how can a one-day electrical outage at a refinery eliminate so much gasoline?! Not possible. Even the refinery fire in texas -- they said they still would continue at full capacity, meaning while there was a fire, it was minor -- yet there supposedly is a shortage. And the Chevron refinery fire last July -- that was supposed to be up and running again by now AT THE LATEST -- so why isn't it, and this after they kept it all secret, refused to release any info, very suspicious?! Marcus, don't count on prices being down by election day -- the word is that they will only be higher between now and then! This even though the electrical outage at the one refinery is long since over and the other supposed issue with a pipeline is or will be over shortly and the Texas issue apparently was minor. Note, independents will be run out of business for lack of cash flow because they could not get supplies but still have to pay their bills. So much for competition. I add it up to another major gaming of the market. And with the loss of competition that is liable to occur, the results will be long lasting.
La vie en rose October 06, 2012 at 01:52 PM
This is too big of a coincidence, right after Obama said in the debate that he wants to cut big oil tax breaks. They want to piss off democratic voters in California . Stay strong my friends! Vote Obama!
ChickenBoyFan October 06, 2012 at 03:24 PM
This is flat out a case of raising prices just before a presidential campaign so the oil companies have a better shot at getting their fellow CEO, Willard Romney elected. Of course they will blame Obama for the gouging. If only he would have called them out on the world stage, at the debates.(sigh) They use age old predictable GOP "wag the dog" tactics, and it gets them really hard in the pants, but it unfortunately hits us in the pocket. We still call them Republicans, but they are more like Corporatarians, a new species. The old GOP has been replaced by this human-animal-machine hybrid, and they are merely up to their old Karl Rovian tricks. We are already slaves to this type of corporate behavior, so get ready for a financial crisis in the next 30 days? Willard being the CEO will ride in on Rafalca to take charge of the situation...blah blah blah. Same circus, with a new dangerous clown. And they will do ANYTHING to get him elected. So, Fasten your seatbelt, America. It's going to be a bumpy ride for the next 30 days.
Joe Busker October 06, 2012 at 04:17 PM
Not everything is about the election. It's not all a big conspiracy. It's like you wanna-be pundits didn't even read the article. You didn't check your facts. You just regurgitate reactionary bullsh*t loudly and frequently, increasing your own conviction in your nonsense, and are bolstered up by other non-fact-checking ninnies who choose to agree with your fictions.
bbkong October 06, 2012 at 05:27 PM
Ah, yes, it's a conspiracy! And it's all ___________ fault! (fill in your favorite boogeyman)
MR STRICKLAND October 06, 2012 at 05:36 PM
nonoise October 06, 2012 at 05:56 PM
Gas prices have been high for the last 4 years. An small increase of twenty cents is nothing. Gas prices have remained high for a long time. Most of the time it was nothing to do with the president except for one that refuses to allow drilling for more oil. Bush or Obama has nothing to do with high gas prices. Just it is easier to blame the president that is in office, but I don't see anyone blaming Obama.
nonoise October 06, 2012 at 06:14 PM
Mr. A big conspiracy? I guess no one watches the news where the problem is with some oil refinary fires and the change in the gas to the winterblend. It is just easier to blame Obama just like Bush got blamed the same way when it is neither presidents fault. The truth is the truth. Just some like to put blame when it does not belong.
El Cid October 06, 2012 at 06:16 PM
BIG OIL COINCIDENCE vs. CONSPIRACY? It's an election year CONSPIRACY! Is there anyone foolish enough to believe otherwise? VOTE OBAMA!!!
bbkong October 06, 2012 at 06:27 PM
Jinx October 07, 2012 at 11:31 PM
It's all the fault of pot dispensaries being bullied, the prom race for president, and/or aliens.
Jinx October 07, 2012 at 11:34 PM
last i checked, the gas i use in the winter is the same substance i use in the summer. it would be naive to believe in seasonal fuel. i
John Wayne's Honda October 08, 2012 at 07:25 PM
Here you go Jinx, explained in easy reading so not to hurt your brain http://auto.howstuffworks.com/fuel-efficiency/fuel-consumption/summer-fuel.htm


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