On the oil price heat map from GasBuddy.com, the state of California is a rich, glowing red. Yikes, the average price there was $4.668 per gallon on Monday. Every alarm bell is ringing wildly. That price is a fair amount above the state’s record of $4.61 a gallon, set in June off 2008.
This is pain at the pump, writ large, and it’s happening right before the election. I note this though California is probably safe for Obama whichever way high gas prices swing. Even though Obama is the go-to guy for getting us off oil dependency, my take is that consumers tend to blame the incumbent for pocketbook issues, including staggering bills for fuel.
Oddly, the 20 states with gas prices below where they were in 2011 are all “red” at the polls, and so some voters there might conclude from the pumps that things aren’t actually getting worse.
Some Californians have paid $5.79 for a gallon of gas, and prices have gone up 20 cents overnight. I've seen pictures of pump price signs where they used backwards "2s" for "5s" because they didn't have enough digits. Nationally, the picture is more mixed, with a $3.81 average. I count only eight states with prices that happen to be up at the moment, and seven states (including my state of Connecticut) with averages above $4 a gallon.
Experts say the California price spike won’t last that long. According to the Automobile Club of Southern California, gasoline wholesalers let their supplies of expensive summer-formula fuel dwindle as they awaited cheaper winter shipments. But then two refineries went offline, and pipeline deliveries from Kern County were disrupted due to high organic chloride levels in the gas. The perfect storm, yes, but not permanent.
Tom Kloza, chief analyst of the Oil Price Information Service, told Reuters that the California prices result from “a series of unfortunate events.” He sees it lasting days, or maybe weeks.
On his blog, notes a few important facts:
- Americans are paying $1.3 billion daily for motor fuel, which is actually down from $1.486 billion a year ago. The main reason is retreating gasoline demand, from discouraged drivers and some people who’ve found other ways to get to work—public transit maybe, or car pools?
- Spot market prices for domestic light sweet crude have retreated from highs of $130 a barrel to $104 now. That points to easing prices ahead, even in California.
And Kloza makes a simple point that’s worth reiterating: “The President, and indeed Congress, together has little power to do anything that influences gasoline prices over the short term,” he said. “They do have the power to craft a long-term energy policy, but we may see $2 gal gas or $5 gal gas before any solutions are crafted by dysfunctional government.” Indeed: Here’s information on Romney’s drill, drill, drill energy policy, in case you missed it.
But, of course, all politicians want to be seen as decisive in a crisis that could affect their standing in the polls, and so Dianne Feinstein (D-CA) is asking the Federal Trade Commission to determine whether refineries deliberately let supplies dwindle to jack up prices. And late last week Governor Jerry Brown ordered the California Air Resources Board (CARB) to let those same refineries make and sell winter fuel earlier than usual.
Meanwhile, the British are paying $8.50 a gallon, and driving the kind of small cars that are finally on the American market, too. Expect sales of the Mini, Chevrolet Spark, Fiat 500 and Ford Fiesta to spike in California, just like the oil prices.