Gasoline prices skyrocketed in Los Angeles County Friday, rising 20 cents overnight to $4.53 a gallon. The jump is the highest amount since July 2008. The average price per gallon is nearing the record set in June 2008.
In Orange County, the average price is $4.52 a gallon, also the highest in four years.
The Oil Price Information Service and the Automobile Club of Southern California said the record price for an average gallon of regular gasoline, $4.62, was 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," said Jeffrey Spring of the Automobile Club of Southern California. "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."
And prices could rise even more.
"It's not clear how much higher prices will go," Spring said. "A lot depends on whether the perceived supply issues are quickly addressed."
Spring said throughout California, the average price of a gallon of regular gasoline jumped 8 cents Thursday to $4.32 and was up 18 cents during the past week.
Some stations ran out of gas and closed Thursday rather than pay those costs. At least 10 Costco gasoline stations also closed in Southern California after the tanks ran dry.
Among the recent disruptions, an Aug. 6 fire at a Chevron Corp. refinery in Richmond left one of the region's largest refineries producing at a reduced capacity.
A power failure in Southern California affected an Exxon Mobil Corp. refinery, and a Chevron pipeline that moves crude to Northern California also was shut down.
The national average for gas is $3.78 a gallon, the highest ever for this time of year. However, gas prices in many states have started decreasing, which is typical for October.
Gasoline inventories lowest in California
But not in California, where gasoline inventories are the lowest in more than 10 years - a situation made worse by the state's strict pollution limits that require a special blend of cleaner-burning gasoline.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said he is seeing the highest prices in the state around Los Angeles, where at least five stations have crossed the $5 a gallon mark, including $5.29 in Burbank and $5.11 in Norwalk.
Prices will keep rising, he said, because in the past week wholesale gasoline prices have jumped $1 a gallon, but average retail prices have increased only 30 cents.
"This is one of the easiest forecasts: Retail prices are going to skyrocket," DeHaan said.
The jump in wholesale prices can be particularly tough on independent gas stations that often pay more for their gas because they are not part of a larger chain.
Tom Kloza, chief oil analyst at Oil Price Information Service, said he's heard of a few California station owners shutting their pumps rather than charging the $4.90 a gallon or more necessary to break even.
"Wholesale price increases lead to retail price increases," Kloza said. "But there is some restraint among companies who do not want to exercise their current pricing power and irritate their customers."
Some analysts believe prices nationally will begin to decline soon but say California could see a longer spike given its unique fuel requirements.
"Nationally, I believe most prices will wobble to and fro for the next week or so, with an eventual slow but steady attrition in retail gas prices, particularly in the Midwest and Southeast," Kloza said. "California is a wild card."