The Breakdown

Explaining Southern California's economy

No Chevron fire and gas prices probably would have stayed lower

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The Labor Department released its July Consumer Price Index this morning. This is an important monthly government dataset because it helps everyone who needs to make decisions about the U.S. economy to get a fix on inflation. There hasn't been much inflation in the U.S. over the past few years, and that's driving pressure on the Federal Reserve to undertake another round of monetary stimulus. (Why worry about pumping potentially inflation-producing money into the economy if there inflation hasn't shown up when money has been pumped into the economy before?)

The July CPI was basically flat. In Los Angeles, however, we're keeping a close eye on gas prices, after the Richmond refinery disaster. Prices have spiked since last week, but at the moment they've leveled off. The average gallon of regular in L.A. is selling for $4.10, according to GasBuddy.com.

This has been a bit of an unfortunately blow for SoCal, given the gas prices had been trending down, according to the BLS. As you can see from the chart above, gasoline prices spike in February — most likely on worries about military conflict in the Middle East — but began to steadily declined from April through June. A modest uptick in July — just .3 percent — signals the onset of the summer driving season. 

But nationally, there was no summer of discontent for gas prices. 

This would have held for L.A. as well, even given that we pay more for our cleaner-burning Golden State gas. 

So the Richmond fire and ensuing volatility in the wholesale gasoline market has introduced some local inflation that's going to hit Californians and Angelenos disproportionately.

Previously:

Map: Search for gas prices in L.A. Why do they vary so much?

Southland gas prices: Are emotions cooling?

After the Chevron refinery fire, gas prices in Los Angeles are rising fast

 

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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