Refinery problems keep gas prices surging in California while rest of US gets some relief

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Michael Dytrych fuels up at the Costco gas station in Sacramento, Calif., Friday, Oct. 5, 2012. Californians woke up to a shock Friday as overnight gasoline prices jumped by as much as 20 cents a gallon in some areas, ending a week of soaring costs that saw some stations close and others charge record prices. The average price of regular gas across the state was nearly $4.49 a gallon, the highest in the nation, according to AAA's Daily Fuel Gauge report. (AP Photo/Rich Pedroncelli)

LOS ANGELES, Calif. - California gas prices continued surging Friday, adding another 17 cents per gallon on average, and the increases are expected to continue for at least several more days, ensuring long lines and short tempers at pumps around the state.

A week of soaring costs has led some stations to close and others to charge record prices — in some places $5 or more — as California leapfrogged Hawaii as the state with the most expensive fuel. The average price for a gallon of regular unleaded across California was nearly $4.49 on Friday, 32 cents more than a week ago and the highest statewide average in the nation, according to AAA's Daily Fuel Gauge report.

The national average is about $3.79 a gallon, the highest ever for this time of year. However, gas prices in many other states have started decreasing, which is typical for October.

Rebecca Olson, 43, of Irvine, drove to a Costco in Tustin hoping to find lower prices than the $4.65 in her neighbourhood, but the pumps were closed.

The part-time preschool teacher said her husband already spends $500 a month on gas, in part because he commutes nearly 100 miles a day to a new sales job after being unemployed for a year.

"All of this is killing us, just because we've got big cars," she said.

They've already parked their GMC Yukon SUV indefinitely. If gas prices keep rising, Olson said they'll sell her husband's Infiniti G35 that requires premium fuel and buy a more efficient car, while making their children ride their bikes to their activities.

"Just last night, we were looking at economical cars, we were car shopping," she said.

The average price for regular gasoline in California hit an all-time high of $4.61 per gallon in June 2008. That could be eclipsed this weekend.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, expects the increase in prices will slow for several days and then level off. He predicted the average price would peak between $4.60 and $4.85.

A web of refinery and transmission problems is to blame, analysts said. The situation is compounded by a pollution law that requires a special blend of cleaner-burning gasoline from April to October, said Denton Cinquegrana, executive editor of the Oil Price Information Service, which helps AAA compile its price survey.

"We use the phrase 'the perfect storm,' and you know what, this current one makes those other perfect storms look like a drizzle. I don't want to scare anyone, but this is a big problem," Cinquegrana said. "Run-outs are happening left and right."

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, and a Chevron pipeline that moves crude oil to Northern California also was shut down.

There was some good news.

Exxon Mobil Corp. said a refinery in Torrance returned to normal operations Friday after a power failure Monday disrupted production for most of the week. State officials acknowledged that reduced supplies triggered a price spike but with the refinery coming back online, prices should start falling.

"The wholesale market appears to have peaked and is heading down," said Alison apRoberts, a spokeswoman for the California Energy Commission. "Because it takes a little while for the price reductions to funnel through the system, consumers at the pumps should start to see some declines over the next week."

Gasoline inventories in California, however, are still at their lowest point in more than 10 years, a situation made worse by the mandate for the special summer gasoline blend. Few refineries outside the state can make it, meaning there are few outside sources to draw from for help, Cinquegrana said.

The California Air Resources Board was reviewing a request from the California Independent Oil Marketers Association for a waiver that would allow gas stations to begin selling winter-blend gasoline before Halloween.

David Clegern, a spokesman for the air board, said the California Energy Commission would have to review gas inventories to confirm there is a shortage and assess what effect the switch would have on air quality.

ApRoberts said that the commission has determined that the state has plenty of gasoline to meet consumer demand.

Gil Duran, a spokesman for Gov. Jerry Brown, said in an email that his office is "monitoring the situation closely."

While prices were higher everywhere in the state, there were variances. Yuba City had the lowest average price at $4.33, according to AAA, while San Francisco was highest at $4.60. Prices averaged $4.54 in the Los Angeles area, $4.52 in San Diego, $4.40 in Fresno and $4.36 in Sacramento.

A station at Vandenberg Air Force Base on the Central Coast was selling gas for $3.91, while the price was $5.69 at a station in Calabasas, outside Los Angeles.

Some stations ran out of gas and shut down rather than take the risk of buying gas at soaring prices only to be stuck with a glut of overpriced fuel if prices dropped or if customers refused to absorb the extra cost that would be passed along to them.

The price of diesel fuel has also increased, adding significant costs for truckers who typically put hundreds of dollars' worth of gas in their tanks. The average price for diesel statewide was $4.48 a gallon Friday — 35 cents more than a year ago, according to AAA.

At a truck stop and gas station off state Route 99, on the outskirts of Fresno, independent trucker Joel Vargas said if diesel hits $5 per gallon, he will probably stop driving because he would be losing money.

"With that kind of price, I won't be able to support myself and my family," he said.

Other residents were taking steps to cut their gas spending.

In Sacramento, restaurant owner Sandra Aboufares spent the morning calling around to find the cheapest price and wound up at a Costco where cars were lined up around the block to pay $3.93 per gallon. Aboufares said she and her husband have cut back on catering out-of-town events, and if prices continue to rise, they might have to suspend free delivery.

"We're trying not to add a delivery fee because you're competing against big chains," she said. "But when people ask for delivery, we say, 'Aw, could you pick it up?'"

Victor Parrott, of Irvine, lost his electrical engineering job at Boeing Co. more than two years ago and was already accustomed to planning his errands to maximize gas efficiency. Now, he said, he will have to cut back even more after paying $4.69 a gallon Thursday — 74 cents more than what he paid a week ago.

"It's killing our pocketbook. You can't budget for it because you don't know what it's going to be," Parrott said as he left a grocery store with his two toddlers. "You just have to put in less. Instead of a half-tank, you put in a quarter-tank."

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Contributing to this report were AP writers Jonathan Fahey in New York, Sandy Shore in Denver, Juliet Williams and Hannah Dreier in Sacramento, Jason Dearen in San Francisco, Beth Harris in Burbank, and Gosia Wozniacka in Fresno; and photographer Damian Dovarganes in Calabasas.