Gas Prices: AAA’s Fuel Gauge Report | October 8, 2012

(WASHINGTON, October 8, 2012)  Today’s national average price for a gallon of regular unleaded gasoline is $3.82.  This price is fractions of a penny cheaper than one month ago, but is four cents more expensive than one week ago and 42 cents more expensive than one year ago.  Today’s national average price is the highest on record for this calendar day and is 37 cents more than the previous record of $3.45 set in 2008.  The daily national average price has been the highest on record for the calendar day for seven straight weeks.   

While the national average price at the pump is up over the last week, motorists in the majority of states — 32 states plus Washington, D.C. — are paying a price today that is in fact lower than a week ago.  Skewing the national average is a historic spike in prices in California, where the state average has increased a record 50 cents in the last week to an all-time high of $4.67 per gallon.  This is nearly double the next largest one-week increase in California history, which was 26 cents in late February of this year.  At that time national gasoline prices were surging due to higher oil prices because of escalating geopolitical tensions with Iran and positive news surrounding European sovereign debt concerns.  The recent increase has come as crude oil prices have moved dramatically lower.  Following Hurricane Katrina in 2005, a number of states east of the Rockies saw prices move even higher in one week than the recent 50-cent increase in California. 

Surging California gas prices made national headlines last week as concerns with already low gasoline supplies approaching the October 31 end to summer-blend gasoline requirements were exacerbated by a Monday power outage at the ExxonMobil refinery in Torrance, Calif.  On Friday afternoon ExxonMobil announced that the refinery had resumed normal operation, but California motorists were already feeling the pain at the pump with prices an average of 44 cents higher by Saturday morning.  Over the weekend California Gov. Jerry Brown directed the California Air Resources Board to grant a waiver allowing the early transition to the sale of winter-grade gasoline.  This waiver was granted today, effective immediately.  While some analysts have indicated that the waiver will provide relief from supply concerns for summer-grade gasoline, others have cautioned that there will not be an immediate impact on supplies, as refineries cannot transition to producing the new blend of gasoline overnight.  Ultimately, wholesale gasoline prices in California were sharply lower today on the combination of the return of production at the Torrance refinery and the issuance of the gasoline waiver.  This suggests that, barring additional regional issues, retail prices in California will also move lower in the coming days. 

After briefly falling below $90 per barrel in late September, West Texas Intermediate (WTI) oil prices settled below this threshold to end last week and continued to move lower today.  These declines have been keyed by continued bearish economic news overseas.  As global economies grow less than expected, they demand less crude oil than anticipated.  This puts downward pressure on global oil prices.  At the close of today’s formal trading on the NYMEX, the price of WTI crude oil had fallen 55 cents per barrel to settle at $89.33.

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