Posted on 07/16/2015 5:42:06 AM PDT by thackney
West Coast spot prices for conventional gasoline increased sharply last week, while falling slightly on the Gulf Coast and remaining flat on the East Coast. The Los Angeles, California, spot price for conventional gasoline increased nearly 90 cents per gallon (cents/gal) between July 6 and July 13, while San Francisco, California, and Portland, Oregon prices increased 24 cents/gal and 5 cents/gal, respectively (Figure 1). This most recent price rise results from a delay in receipts of waterborne imports of gasoline blending components and a decrease in total motor gasoline inventories within an already constrained supply chain.
West Coast spot gasoline prices typically trade at a premium to prices in other regions of the country because of the region's unique product specifications and relative isolation from other domestic and international markets. As a result, West Coast gasoline markets are primarily supplied by in-region production, and prices react more quickly and strongly during times of local supply shortages. The West Coast gasoline spot price differential has been higher than usual for the past several months following a series of supply disruptions caused by an unplanned refinery outage in February and additional refinery outages in April. Also, West Coast gasoline demand is up 4% in the first four months of 2015 compared with the same time last year, putting additional pressure on the supply chain.
Higher spot market prices for gasoline on the West Coast have led to higher retail prices. As of July 13, the West Coast retail price for regular gasoline was 76 cents/gal above the national average, largely because of California's 105 cents/gal premium compared with the national level (Figure 2). Similar to the gasoline spot market prices, the West Coast retail price premium compared with the national average has been elevated since the February 18 explosion and fire at ExxonMobil's Torrance refinery in southern California. Each time the market has rebalanced in the wake of subsequent supply disruptions, prices have settled at levels that reflect the higher cost of bringing in alternative supply. However, despite the series of disruptions, retail prices are 41 cents/gal and 21 cents/gal lower than a year ago on the West Coast and in California, respectively, because of lower global crude oil prices.
In the five weeks following the Torrance outage, West Coast total motor gasoline inventories decreased by 3.0 million barrels. While gasoline inventories typically fall during that time of year, this year's decrease was sharper than in the previous two years, and inventories dropped below the five-year range for four weeks in a row (Figure 3). In times of supply disruptions, inventories provide an immediate, although limited, source of alternative supply. However, because of product specifications and minimum operating inventory levels (tank bottoms), inventories alone are often insufficient to offset a prolonged market disruption. Movements from other regions within the country to the West Coast are limited because of minimal pipeline connectivity with neighboring regions and the fact that not all U.S. refineries can produce gasoline that meets California product specifications. Following the initial rapid decrease in West Coast inventories, storage levels recovered, and even exceeded 2013 and 2014 levels, as imports increased to replace in-region production. However, the reported 1.1 million barrel inventory drawdown for the week ending July 3 may have signaled that the market is experiencing renewed stress.
Because of its unique product specifications and long distance from international gasoline markets, the West Coast does not typically import much gasoline (Figure 4). From 2010 through 2014, total motor gasoline imports (including both finished motor gasoline and blending components) averaged 24,000 barrels per day (b/d) and were mostly from Canada, meeting approximately 1% of regional demand. However, in times of extended supply disruptions, alternative sources of supply come from farther away. These additional gasoline imports require long lead times and higher prices. Several weeks after the Torrance outage, West Coast gasoline imports more than tripled, and averaged 81,000 b/d from March 27 through June 26. Monthly data through April (the latest available) show California total gasoline imports coming from South Korea, Singapore, Japan, and Taiwan in Asia as well as Sweden, the United Kingdom, Italy, and the Netherlands in Europe. For the week ending July 3, West Coast gasoline imports dropped to zero and trade press reports indicate that cargos bound for California have been delayed. Buying may have also slowed in late June as the arbitrage window narrowed, meaning that fewer shipments are on the way to the West Coast. Longer supply chains are subject to such interruptions and when that happens, price reactions are often immediate and significant.
Other periods of price spikes have occurred in California, most notably in 2008, 2009, and 2012, that were similar in duration and magnitude to the current situation. By early June of this year, the other refineries were back in operation so only the Torrance refinery remains down. Prices will likely stabilize again when imports and inventories increase, but are likely to remain elevated until the repairs to the Torrance refinery are completed later this summer.
U.S. average gasoline price increases while the diesel price continues to decline
The U.S. average retail price for regular gasoline increased four cents from the previous week to $2.83 per gallon as of July 13, 2015, 80 cents per gallon less than the same time last year. The largest increase came on the West Coast where the price jumped 29 cents to $3.59 per gallon. The Gulf Coast and Rocky Mountain prices both increased one cent to $2.53 per gallon and $2.82 per gallon, respectively. The Midwest price declined two cents to $2.72 per gallon and the East Coast price was $2.71 per gallon, one cent less than last week.
The U.S. average price of diesel fuel decreased two cents from last week to $2.81 per gallon, $1.08 per gallon lower than the same time last year. Prices declined in all regions except the Rocky Mountain region where a marginal increase left the price virtually unchanged at $2.79 per gallon. The largest decline came on the West Coast where the price fell three cents to $3.04 per gallon. The East Coast and Midwest prices both decreased two cents to $2.92 per gallon and $2.70 per gallon, respectively. On the Gulf Coast, the price dropped by less than half a cent, remaining at $2.71 per gallon.
Propane inventories gain
U.S. propane stocks increased by 1.7 million barrels last week to 87.4 million barrels as of July 10, 2015, 24.1 million barrels (38.1%) higher than a year ago. Gulf Coast inventories increased by 2.1 million barrels and Midwest inventories increased by 0.5 million barrels. East Coast inventories decreased by 0.9 million barrels while Rocky Mountain/West Coast inventories remained unchanged. Propylene non-fuel-use inventories represented 5.9% of total propane inventories.
California sits on a puddle of oil and is the logical destination for Alaska crude tankers...
California and Oregon gas prices up. Environmental fringe lunatic liberals are Celebrating. They want to tighten the noose even more to strangle oil use.
Don’t most of those Alaska tankers go to Japan?
Just watching the left coast and going “hmmm” , since there is nothing new here under the sun
What might the big guys know
Well, they can swallow their own frog, sleep in their own messy bed, or whatever slang your want to use. Let them build their own refineries and stop driving up the cost to me outside their granola land (land of fruits and nuts) state.
More regulation from CARB will solve this.
Don’t most of those Alaska tankers go to Japan?
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The Japan export is basically a false legend. Look at a map.
It is 3,577 miles from Valdez, Alaska to Tokyo, Japan.
It is 1,274 miles from Valdez, Alaska to Anacortes, Washington. (largest Washington refineries)
It is 2,253 miles from Valdez, Alaska to El Segundo, California (major refinery near Los Angeles)
Until 1996 it was illegal to export Alaskan North Slope Crude oil because of the Congressional Approval used to create the pipeline.
In the mid-late 1990’s, because of a glut of oil on the West coast, this was relieved and less than 5% of ANS crude was exported. That quit by 2000.
Most stop in Washington but the remaining go to California. The problem is the dwindling flow.
Alaska North Slope Crude Oil Production
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MANFPAK2&f=M
Isolation? Bull crap. I remember reading that local CA environmental laws have 32 different "blending" rules for distillate fuels to keep the tree-huggers happy. On top of that, CA fights any proposed power or refinery construction, outlaws offshore drilling, and otherwise throttles production and supply at every turn. Not a problem as long as they are happy paying for their wishes.
“unique product specifications” and “gasoline blending requirements” — code for government over-regulation, most likely driven by liberals.
Kalifornians are the most clueless people on earth. They vote liberal because that’s their mantra. Then when they see themselves in the middle of a third world and economic sewer they wonder why. They’re like children who depend upon a television program for a world view.
Too bad much of Alaska is off limits...
The “leaders” now in charge of the dictatorial regime that has overtaken California have declared war on most of the symbols of middle-class affluence, primarily automobiles and suburban growth. The ongoing efforts to regulate out of existence the sources of power and expansion of the existing economic base, through taxation and making cost of doing business so restrictive, that there is a net outflow of capital and talent from that once highly favored land.
Unfortunately, with the outflow of capital, there has also been an outflow of the same kind of non-critical thinking that put California in such a bind to begin with. Are snail darters REALLY more important than getting lettuce and almonds to the supermarket? Once, California was the great beacon that drew millions there from the drought-stricken new deserts of Oklahoma and Arkansas, on the promise of plentiful water from the system of dikes, sloughs, and dams that had been constructed in California beginning in the early years of the 20th Century, and made what was once semi-arid lands bloom with great profusion and fecundity, with an almost year-round growing season.
This prosperity built some really great fortunes, so much so that those who inherited those fortunes were subject to an onerous burden of guilt, and they, in their blind and tearful shame, proceeded to dismantle the very infrastructure which had created the vast fortunes to begin with. The dams were blown up, draconian measures for water use restrictions were instituted, and harsh punishments were laid down for infractions.
California used to be a leading oil production and refining center, the better to feed its growing network of roadways and vehicles to travel them, moving wealth in trucks, ships, and even airplanes, out to every other corner of America and even to foreign destinations. But now, power generation is considered “dirty” and a disgrace, so California is no longer self-sufficient in power sources, becoming a consumer that grabs away these resources in ever greater measure, and creating what is after all, a totally artificial scarcity and excessive pricing. After all, since competition is no longer feasible, where are the consumers going to go?
Elsewhere, it turns out, as the productive people flee California for more clement venues, lower taxation, and much greater plenitude of reasonably priced goods and services. Only the very wealthy, with their solicitous attitude on what is “best” for the common folk, and the very poor still remain, and “the rich” cannot be counted to give their “fair share” (which is EVERYTHING they now possess) to the support of the very poor.
That is true, exports of US crude have been restricted for decades although some recent sales ( South Korea 2014) pushed the law
Japan’s major supplier is middle east and obama ‘s deal with his Iranian pen pals will possibly flood the market with Iranian oil once sanctions lifted
Oil that must pass through waters increasingly subject to Chinese hegemony over the western Pacific
I wonder if the new obamatrade treaty deal with the
Pacific Rim will end up directing more of our oil to China Japan etc? Since no one in Congress read it before they capitulated
We live in interesting times
Also too bad that much in state control is taxed out of economic use.
~40% of Alaska not under federal control. A little smaller area than Texas and ~60% than California.
do the wealthy control or do the city riff raff control?
California and Washington State still need to import oil. They won’t be getting enough by railroad from the Bakken to come close to replacing the dwindling Alaskan Supply.
They are going to pay market prices, and it is cheaper to move the oil 1/3 ~ !/2 the distance.
California drivers pay 71 cents per gallon in taxes.
Los Angeles average price $4.28
Minneapolis/St Paul, Minnesota is $2.69
http://www.gasbuddy.com
Thousands more taken out of your pocket.
The wealthy withdraw their support of maintaining the civil order, or worse, fund the growth of organizations like “Occupy Oakland” or “Occupy Berkeley” or”Occupy Watts”, or wherever civil unrest is the instrument to break up the existing order.
This will never reach THEIR homes, of course. William Randolph Hearst’s Castle at San Simeon was but an extreme example of this insular kind of life, but there are many much smaller (but still opulent) enclaves where the “common folk” shall never enter.
Until they storm the gates.
It seems to me that virtually EACH and EVERY problem I read or hear about concerning California can be labeled as “proudly” SELF-INFLICTED.
A dire water shortage can be traced directly to-——.
A heavy rise in fuel price can be traced directly to—.
A scary rise in crime can be traced directly to-——.
You’d think that at least a few retain some sanity.
I guess NOT.
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