California crisis means $4 gas for a while
Refinery problems and speculative bets keep pressure on pumps nationwide.
Gas prices in California rose as much as 20 cents per gallon between Thursday night and Friday morning, and the state's fuel shortage is just one reason U.S. gas prices will flirt with $4 for a while.
The average price of a gallon of regular gasoline in California is nearly $4.49, according to the AAA Daily Fuel Gauge Report. That's the highest in the country and far exceeds the roughly $3.89-a-gallon national average reported by the Energy Information Administration -- still a record for this time of year.
If you own an Exxon-Mobil (XOM) station near San Francisco, your prices are likely closer to $4.60. Even high-volume Costco (COST) gas stations can't offer any relief, as the Los Angeles Times reported that the big-box retailer had to shut down some of its pumps.
"We do not know when we will be resupplied," read a sign at one Southern California Costco, according to the Times.
In some areas of the car-happy state, prices have jumped 40 cents in a week as refinery problems have created shortages and helped send wholesale prices soaring. Among the recent disruptions, an Aug. 6 fire at a Chevron (CVX) refinery in Richmond has one of the region's largest refineries producing at reduced capacity. A power failure in Southern California has affected an Exxon Mobil refinery, and a Chevron pipeline that moves crude to Northern California also was shut down.
While all of the above is putting pressure on California pumps, other forces far beyond the state's borders are fueling price increases and a sticky nationwide slide from $4 a gallon. There hasn't been a refinery built in the U.S. since 1976, which means each time one goes offline for a bit or shuts down, the gap between crude oil and gasoline supplies widens. Commodities brokers know this all too well and are starting to place huge bets on commodities futures as peak winter heating demand nears.
As noted by Fortune, a recently released United Nations report explicitly states that the "financialization" of commodities markets -- "hundreds of billions of dollars of bets placed on expectations of temporarily rising prices" for energy, food and other goods -- is the "root cause" of elevated prices. That's right, a bunch of folks sitting at home barking orders to traders as if it were a scene from "Trading Places" helped boost gasoline prices, which in turn pushed this summer's global oil prices 65% higher than the averages reached during the commodity price boom of 2003 to 2008.
"Investors treat commodities as an asset class, which means that they are betting on a certain price trend during the period they are invested in commodity assets," the UN said. "They do not trade systematically on the basis of fundamental supply and demand relationships in single markets, even if shocks in those markets may influence their behavior temporarily."
In a fuel market in which drivers already think prices are headed toward $5 a gallon, commodities brokers and investors aren't just potentially funneling populist anger away from fuel companies and toward Wall Street. They're building that anger a pipeline.
Meanwhile gas sells for .24 cents a gallon in Venezuela while our government sends Chavez more money in government aid. Hey Hugo why don't you lets us federalize Citgo for you.
I had to take a job where I drive 85 miles round trip everyday and this is killing me. It was bad enough that I had to take a huge paycut after being unemployed for a long time and not able to find work closer to home then gas prices go thru the ceiling. Two mornings ago I paid $4.49/gal for premium, have to use that grade in my Jetta, then in one day it went up to $4.73, ridiculous! So am making $15.50/hour and pay about $400/month for gas just for work. That isn't counting if I go out, which I've seriously cut down on.
Now, is it our fault that a fire broke out at the refinery in WA because there was not enough protection to prevent it? Is it our fault there was a power outage at the refinery in SoCal and that they didn't have preventative measures in place for back up power? I don't know what's behind the closure of the crude pipeline to NoCal so wont' comment on that. Now we know that Exxon-Mobil is going to file claims w/their insurance carriers so they're covered for their losses, who do we go to to recover our losses from these BS high prices??
As I've said for many years, this country is RIPE FOR A REVOLUTION!
That's all I got to say.
I bet by tomorrow every gas station across the US will jack their prices up by 20 cents a gallon just because CA did
we heard it coming several months ago when blow bama said we should be paying what Europeans are paying for gas. ALL of the politicians who are currently seated in Washington should be ousted and replaced with people who have no ties there. let them all know we have the power to control how they vote with ours. there is never a reason for our gas price to be this high other than corporate greed and price gouging. USA is the 4th largest exporter of crude! get that! we need to keep it and our foreign aid money here and take care of our economy and home folks first and foremost.. to HELL with opec and the jihadist countries that don't like our freedoms. how come so many of them want to come here or want to change our way of living? It's time we quit worrying about all the others and do what it takes to get America back on track and in focus with GOD!
"There hasn't been a refinery built in the U.S. since 1976"
I notice in these types of articles that there is never any mention of the 25%-30% of refineries which were SHUT DOWN to create a "shortage" and raise prices when good old Ronald Reagan deregulated the industry back in the 1980's!
If anyone gave it more than 5 minutes thought, they would come to the realization that the oil and gas industry is nothing more than an unregulated public utility. Or course nothing will change as long as poiltitians can be bought and paid for!
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Do it once a year. This allows the best-performing asset classes to take off and run.
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