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

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.