Refiners Rationing as Gas Stations Run Out of Fuel; Prices Soar

Even mass-retailer Costco shuts down the pumps, but not near North Hollywood.

San Fernando Valley Costco stores in Northridge and Simi Valley have shut down their gasoline pumps, but store locations near North Hollywood in Van Nuys, Pacoima and Burbank still have enough supply in light of a recent shortage.

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.

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.

In North Hollywood, the highest price for a gallon of unleaded was $4.99 at the Mobil at 11680 Burbank Blvd, while the lowest was $4.39 at an Arco at 6804 Vineland, according to GasBuddy.com.

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 last week.

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 Bloomberg Businessweek.

"Valero halted spot sales of gasoline in Southern California and is allocating the rest of its deliveries to customers. Exxon is also rationing fuel to buyers at West Coast terminals," the report says.

Bob van der Valk, an independent petroleum industry analyst, told KNX radio, “Right now, gas stations are trying to wean out what they have of the 'summer blend.' 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.”

Greg Bond, assistant warehouse manager at the Simi Valley Costco, told the Daily News that the shortage hit on Wednesday.

"We're down 100 percent from yesterday. There are definitely some supply issues out there. Unfortunately I don't know how long it will take to fix at this point," he said.

With the shortage, prices are on the rise. A West Covina station was already charging $5.31 a gallon for regular gas on Thursday, GasBuddy.com reported.

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.

Spring said "it's not clear" how much higher prices will go.

"A lot depends on whether the perceived supply issues are quickly addressed," he said.

"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.

-- City News Service contributed to this report.

Denis Higgins October 06, 2012 at 11:48 PM
The Mobil station mentioned in the article has ALWAYS been higher in price than its competitors! The owner should be charged with price-gouging!
Bob Peppermuller October 07, 2012 at 07:14 PM
Amazing how repetitive this is. You would think the CEOs have this on their to-do list to repeat every year.
Bob Peppermuller October 07, 2012 at 07:18 PM
Next to freeway stations ALWAYS gouge.
Allan October 08, 2012 at 05:42 PM
No JackM, moving for lots of other CA reasons.
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