In the United States, while the average gasoline prices have been decreasing, the prices in California, especially in Southern California, have been on the rise. According to the American Automobile Association (AAA), on November 4th, which was election day, the national average retail price for regular gasoline was $3.053 per gallon. The prices for regular gas in the western and northeastern regions of the U.S. are notably higher compared to the central and southern regions. The cheapest gas station in the country is located in Cookeville, Tennessee, where the price for regular gas is only $1.99 per gallon.
Compared to the previous Tuesday, the national average price for regular gasoline only increased by less than a cent, and compared to a month ago, it has dropped by about 10 cents. On that day, the average gasoline price in California was $4.66, slightly higher than the day before, nearly 8 cents higher than a week ago, and less than 2 cents higher than a month ago.
In Texas, the state with the second-largest population in the U.S., the average price for regular gas is $2.59, which is over $2 cheaper than in California. In Los Angeles County, which has the largest population in California, the average gas price on Tuesday was $4.78, a bit higher compared to Monday, over 15 cents higher than a week ago, and 6 cents higher than a month ago. The local gas prices have been rising for five consecutive days: last Friday, prices increased by 7.7 cents.
In another major city in Southern California, San Diego County, the gas prices have risen to $4.863, slightly higher than Monday, 15 cents more expensive than a week ago, and 9 cents more expensive than a year ago. Several counties in northwestern and eastern California, bordering Nevada, have gas prices exceeding $5; the highest price is in Mono County in the east, reaching $5.878.
Gas prices usually drop during the fall season because the demand for gasoline decreases after the peak summer travel season. Additionally, starting in November, refineries typically switch to producing cheaper winter blend gasoline, which also helps to lower the average gasoline prices.
In August of this year, the U.S. reached a historical peak in oil production, with daily production climbing to 13.8 million barrels, setting a record for the third consecutive month. Despite falling oil prices nationwide, why have gas prices in California suddenly increased?
Doug Shupe, a spokesperson for the Automobile Club of Southern California, explained that local gas stations started selling winter blend gasoline at lower production costs since last Saturday, helping to reduce gas prices. Shupe stated on Thursday that wholesale gasoline prices in Los Angeles began rising during the week, leading to price increases in some areas. Reports suggest that planned and unplanned maintenance at some refineries, as well as market expectations of stronger gasoline futures prices, caused wholesale gasoline prices to climb by double-digit percentages starting last week.
Denton Cinquegrana, Chief Oil Analyst at the Oil Price Information Service (OPIS), believes that unplanned maintenance at California refineries and the imminent closure of two refineries are the main reasons for the surge in wholesale gasoline prices. The so-called unplanned maintenance, usually due to accidents, has caused market chaos. Planned maintenance may also reduce gas supply, slightly increasing gas station prices. De Haan believes that this is clearly enough to impact gas prices.
Two large refineries, the Phillips 66 refinery in southern Los Angeles which will close next month, and the Valero Benicia refinery in the San Francisco Bay Area which will close in six months, by April 2026, both with a production capacity of 145,000 barrels, are expected to reduce California’s refining capacity by 17% to 18% after their closure. In the early 1980s, California had 40 refineries, but now there are only 12 left; after the closure of these two refineries, it will further decrease to 10. Analysts attribute the refinery closures to low profitability and unsustainable operations. The stringent regulations by the California environmental agencies on air quality testing, emission control, and environmental remediation have significantly affected the efficiency of refineries.
Additionally, the Chevron refinery in El Segundo, in southern Los Angeles, experienced a major fire on October 2nd. This refinery processes 290,000 barrels of crude oil per day, accounting for 16% of California’s operations. After the fire, some petroleum analysts estimated that this would lead to an increase in California gas prices by 10 to 20 cents.