Gasoline Prices Likely to Keep Rising

Gasoline prices in Southern California are edging up again and are expected to keep rising in advance of the long Fourth of July weekend.

At the pump, the average price in the Los Angeles-Long Beach area for a gallon of regular gasoline was $1.617 on Tuesday, up from $1.589 on Monday, according to the Automobile Club of Southern California’s survey of 2,800 stations.

A weekly survey by the U.S. Energy Information Administration also charted the increase, saying the average price in Los Angeles for a gallon of regular gas Monday was $1.574, up 4.1 cents from a week ago.

And gasoline prices in California are expected to increase an additional 5 cents to 7 cents in the next two weeks, said Will Woods, executive director of the Automotive Trade Organizations of California.

“I think there’s every indication that the prices will creep up all the way through Fourth of July,” Woods said. “Right now, we’re seeing a slow, steady increase.”

The increase is being blamed in part on a refinery outage, shrinking inventories and expectations of heavy automobile travel during what will be a four-day weekend for many Americans. Wholesale gasoline prices on the Los Angeles spot market hit a nine-month high of $1 a gallon last week, although prices ebbed to 95.5 cents on Tuesday, according to Bloomberg’s gasoline price survey.

A Valero Energy Corp. refinery in Benicia, Calif., had a power outage about two weeks ago that was expected to reduce a hydrogen unit’s output for a month, cutting its production of the special lower-emission gasoline required in California from full capacity of 120,000 barrels a day to less than 90,000.

“Here in California, we have such a sensitive infrastructure between all the refiners. If one of them breaks down, the whole system sort of takes a hit,” said Bob van der Valk, bulk fuels manager at Cosby Oil Co., an independent fuel distributor in Santa Fe Springs.

“There’s been kind of a lull for the last two months, but the lull is over,” Van der Valk said.

Nationally, gasoline prices are stable. The average retail price was $1.378 on Monday, up 0.3 cent from a week earlier, according to the latest government data.

The reformulated gasoline California requires keeps the market isolated, and gasoline retailers said less refinery competition keeps gasoline prices higher in the state compared with the rest of the country.

The Energy Information Administration has predicted a strong travel season this summer. Experts in the travel industry expect more travelers to opt for driving rather than flying to vacation destinations, which could mean high demand for gasoline.

The agency projects record gasoline demand of 8.88 million barrels a day as the economy gradually accelerates this summer, up 1.6% from last summer.

But motorists can take heart in predictions that prices won’t hit levels as high as in the last two summers. Average prices in the Los Angeles-Long Beach area hit a record high of $2.036 on May 25 last year, the Automobile Club said.

“No one’s expecting huge spikes this summer,” said Energy Information Administration analyst David Costello. “Nationally, we have a pretty good supply of gasoline.”