Color-Coded US Map Shows Regional Impacts on Gas Prices

Will tight supplies in California affect what Idahoans are paying at the pump?

BOISE – (July 15, 2015) – Since just last Friday, tightening supplies of gasoline have been responsible for a 43-cent spike in pump prices in California. Idahoans already paying the country’s seventh highest prices may be wondering whether the Gem State will be next.

California’s average price today is $3.86, more than a dollar a gallon higher than the U.S. average price of $2.78. Idaho’s average price is $3.05, seventh highest in the country. The national average price is up slightly from a week ago, but is at the lowest level for this date in nearly five years. Month-over-month prices are down in 33 states, and distribution issues in other parts of the country are under control in reflecting much lower prices in some states: Indiana, (-26 cents), Michigan (-13 cents), Ohio (-10 cents).

Higher pump prices in the West, including Idaho, could be poised for another increase, if regional markets respond as they did following the February 18 fire and explosion of the ExxonMobil refinery in Torrance, California. A map of the U.S. shows the influence of regional factors in the retail pricing of gasoline.

National Gas Price Map

Source: www.fuelgaugereport.AAA.com

The shutdown of that refinery constricted regional supplies, resulting in immediately higher prices in California and on the West Coast. Within about three weeks of that event, Idaho pump prices shot up 39 cents a gallon to $2.34. Since that time, Idaho’s prices have risen at a more modest rate; nevertheless the state’s average price broke the $3.00-a-gallon barrier by July 2. Idaho’s current average price is $3.05, high enough to be seventh highest among all states.

Californians are once again weathering sharp increases in gas prices due to reports of tightening supply in the state. The rapid run up in that state’s fuel prices has drawn the attention of the California Energy Commission, which is now investigating the fundamentals behind this most recent spike.

Early reports indicate that despite refineries exceeding last year’s production rates, higher than expected demand for gasoline has resulted in significant drawdowns in the supply and distribution systems which are unable to keep pace.

“Will California’s current supply issues affect Idaho?” asks AAA Dave Carlson, director of public and government affairs for AAA Idaho. “It’s a valid question, given the fact that fuel intended for the Idaho market was diverted elsewhere earlier this year, which led to higher Idaho pump prices.”

“Call it a ripple effect or simply how markets respond when gasoline intended for one marketplace is diverted to another,” Carlson commented. Gasoline refined in Salt Lake may again be sent to other destinations, including Las Vegas, to fill shortage gaps, AAA said.

Part of the problem is that suppliers operate in “just-in-time” gasoline inventories, according to AAA. Supply is delivered only as demand requires—which limits storage costs, but can lead to significant spikes in price when supply and demand are out of balance.

The regional gasoline supply issues are occurring at a time when there is a glut of inexpensive oil in the marketplace. West Texas Intermediate (WTI) closed at $53.04 yesterday, compared to $100 a year ago.

High pump prices dominate the western U.S. landscape. Here’s a look at the most expensive states to fuel up: California, $3.86; Alaska, $3.48; Hawaii, $3.34; Nevada, $3.28; Washington, $3.20, Oregon, $3.15; Idaho, $3.05.

Other impacts include Idaho’s recent 7-cent-a-gallon increase in the state’s gas tax, which went into effect July 1.

Fuel prices are updated daily at AAA’s Daily Fuel Gauge at www.aaafuelgaugereport.com/. To check fuel prices across Idaho and the nation, go to the AAA Fuel Price Finder. AAA Oregon/Idaho provides more than 755,000 members with travel, insurance, financial and automotive-related services, and is an affiliate of AAA National, serving more than 55 million motorists in North America.