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Californians facing heavy pain and record high at the pumps

By Catholic Online (NEWS CONSORTIUM)
October 5th, 2012
Catholic Online (www.catholic.org)

Those in the Golden State are driving up to their local convenience stores with a mixture of anger and apprehension. Gas prices in California have skyrocketed over the past several days, sometimes as much as a 30 cent increase daily. In response, many service stations elected to shut off their pumps this week.

LOS ANGELES, CA (Catholic Online) - in spite of worried speculation, California's fuel industry isn't running out of gasoline. Supplies are only 2.5 percent lower than this time in 2011. However, recent refinery and pipeline failures have sent wholesale prices to all-time highs.

The situation is so bad that some gas station owners didn't buy gas for fear they couldn't sell it. Those who did buy simply kicked prices higher and hoped their customers would understand.

"If this keeps up, I'll be looking at $5-a-gallon gas by next Thursday," a gas station owner in Riverside County said. His gas station was charging $4.52 for a gallon of regular gasoline, up from $4.27 on Wednesday and $4.21 on Tuesday.

"I really don't have any choice here, and I won't be making money at $4.52 a gallon," he said.

Even worse, some gas stations have already crossed the $5 threshold. Some stations in Calabasas were selling regular gasoline for $5.69 a gallon in cash, or $5.79 for credit card purchases. In addition to the high prices, the pumps displayed hand-lettered signs reading: "We are sorry, it is not our fault."

Customers have predictably thinned out as prices soared at the Low-P gas station. Low-P has to pay more "because we're an independent gas station" that lacks the buying power of its big-brand counterparts, owner John Rabi, who paid $40,000 for a 9,000-gallon load, says.

Many stations have closed their pumps as soon as they ran out of the fuel they'd bought more cheaply. At the current wholesale price, owners feared that they would be stuck selling that gas at a loss when prices fell.

A sign at one Costco apologized: "We do not know when we will be resupplied."

The wholesale price of California gasoline hit a record-setting $4.39 a gallon this week. According to Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, the wholesale price surpassed even the retail price: California filling stations were charging $4.315 on average Thursday.

Mishaps have fallen some of California's 14 refineries, which operate with little margin for error because few facilities outside California make the state's cleaner-burning gasoline.

"Most recently there has been a problem with an oil pipeline that supplies gasoline for Tesoro, Valero and Shell stations," Patrick DeHaan, senior petroleum analyst for GasBuddy.com says.

A power outage the beginning of this week forced the temporary shutdown of Exxon Mobil's Torrance refinery, DeHaan said. An August fire at Chevron Corp.'s Richmond refinery was also blamed.

"There is a sense out there that this might not just be the typical run of bad timing and bad luck in terms of refinery outages," Kloza says. "People are beginning to wonder whether something else might be involved. Has the heat been a factor? Is the electrical grid holding up? Are these refineries just a little too old?"

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