Explaining Southern California's economy

FAQ: Why are gas prices so high in Los Angeles? Everything you need to know

Gasoline Prices

Ed Joyce / KPCC

Southern California gasoline prices skyrocketed Friday to $4.53 a gallon, nearing the all-time record price set in 2008. And there's no relief in sight.

In one short week, the price of a gallon of regular gasoline has shot through the roof, climbing nearly 50 cents. The price in Los Angeles County is currently at $4.59 on average, with prices in some parts of the city closing in on ... wait for it ...

Six bucks!

What's behind the big spike, which has now placed us within spitting distance of our all-time 2008 high of $4.61. 

Why? Why?!

Glad you asked...

Q: Does this have anything to do with the fire at Chevron's Richmond refinery from back in August?

A: YES! The oldest refinery in the state still isn't fully back online. It accounts for around 15 percent of all the gas that goes into motorists' tanks in the Golden State. And this isn't just any gas — it's a special formula, more environmentally benign, that is required by state law. Burning that fuel already costs Californians more than states where bad, old environmentally less clean gas is consumed. So any disruption in the supply is going to push our gas prices up — fast!

Q: But that fire happened in August. Why the spike in prices now?

A: With the supply of gas already under stress, any additional shocks have an immediate effect at the pump. Those shocks came due to two events. First, the heatwave in Southern California caused a power outage that knocked out an Exxon refinery in Torrance. Second, a major north-south oil pipeline was knocked offline, curtailing the supply of raw material — crude oil — to the state's already weakened refinery network.

Q: Give it to us straight: Will gas hit an average of $5 a gallon?

A: The price went up by nearly 50 cents in a week. Nothing is impossible. A certain temporary insanity can take over as consumer try to fill up before the price gets out of sight.

Q: Is there any relief in sight?

A: Sadly ... no. Analysts estimate that gas prices in the L.A. area will remain elevated through the end of the year. So the question isn't "Will we crack $5 a gallon?" but "Will it ever drop below $4 a gallon?" And the answer to that second question is "Not before Christmas."

Q: But wait, I thought we were in the middle of a domestic oil boom. What about the fracking? Won't the fracking save us?

A: Nope. Getting the oil out of the ground is one thing. Getting it to refineries is another. In California, as in much of the rest of the developed world, big oil companies want to get out of the refining business, because it is so much less profitable than exploring for and extracting Black Gold, Texas Tea — the essential fluid that powers our global economy. This means that while there might be plenty of relatively cheap oil sloshing around, there is less and less refining capacity to turn it into gasoline. That makes for a system that is always on the verge of a supply crunch that intersects with, in California especially, unrelenting demand.

We can frack all we want. The logjam is with the refineries.

Los Angeles Gas Prices provided by GasBuddy.com
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