Refinery Issues keep West Coast Pump Prices well above National Average

“Retail gas prices on the West Coast are close to and in some cases above historic highs. While the rest of the country is enjoying falling gas prices, they continue to rise in this region. The national average for regular unleaded loses four cents this week to $3.64, while Oregon’s statewide average gains three cents to $4.25.” AAA Oregon Public Affairs Director Marie Dodds says, “Heading into the Memorial Day weekend, some analysts predicted gas prices would spike 10 to 35 cents a gallon in the west, but AAA expected gains of a few cents, and that’s what happened. We continue to see upward pressure on prices in this area because of ongoing refinery issues.”

The national average reached its high point of the year so far on April 6, peaking at $3.94, and has declined since then. But gas prices skyrocketed on the West Coast this month because lingering refinery issues have created very tight supplies in this region. Washington state’s largest refinery, Cherry Point, was shut down in February after a fire and has been mostly off line since then, and there’s been a string of unplanned outages at other refineries in the region. The U.S. Department of Energy says these low refinery runs led to several weeks of inventory draws which left gasoline inventories on the West Coast at 24.1 million barrels on May 18, about 5.1 million barrels (17 percent) below typical levels for that date, the lowest for the region since March 1999.

The West Coast is especially sensitive to refinery outages because this region is fairly isolated. There are few significant pipeline connections to other markets, and long distances from the active trading markets in the Atlantic Basin.

Reports that the Cherry Point refinery will soon be restarted have helped to send wholesale prices on the West Coast lower. It can take about six weeks for wholesale price changes to be fully passed through to retail prices, so if there are no further disruptions in supply, retail prices should move down in the next few weeks.

While pump prices were spiking in the west, drivers in the rest of the country have seen gas prices drop. The national average has fallen 18 cents in the last month, and is 15 cents lower than a year ago. Fifteen states currently have gas below $3.50 a gallon.

Crude oil is trading around $91 per barrel, compared to $92 a week ago. For the month, crude prices are down about 13 percent. These losses have been led by increasing global economic concerns — most notably Greek sovereign debt issues impacting the euro zone and subsequent strength in the U.S. dollar. Crude oil is bought and sold in dollars, and when the dollar is stronger compared to other currencies, crude becomes more expensive for investors using other currencies and demand for crude decreases, putting downward pressure on prices.

The AAA TripTik Mobile app can help consumers find the cheapest gasoline in their areas. AAA TripTik Mobile is a GPS-based app with maps showing gas station locations and other points of interest near a user’s location or any user-specified location. Gas station details include updated prices for all available grades of gasoline. The free app is available for iPhones and the Android market.

Five states have gas at or above $4 a gallon, same as last week. The top five most expensive states are the same for the third week in a row, with California, Washington and Oregon in the top five. Hawaii is most expensive for the 46th consecutive week at $4.53, followed by Alaska at $4.52, California at $4.28 (down a nickel and third most expensive for the ninth week in a row), Washington at $4.27 (up 3 cents and fourth for the fourth week in a row), and Oregon at $4.25 (fifth for the third week in a row). For the third week in a row, South Carolina has the cheapest gas in the country at $3.26 (down eight cents).

Diesel prices are easing in most markets. The national average drops a nickel to $3.94 while Oregon’s average also loses a nickel to $4.29. Diesel is at or above $4 a gallon in 16 states (including the District of Columbia) compared to 23 states last week. Hawaii is most expensive at $4.91, followed by Alaska at $4.65 Washington at $4.37 (down six cents and third for the eighth consecutive week), California at $4.30 (down seven cents and fourth for the eighth week in a row), and Oregon at $4.20 (fifth for the third consecutive week). A year ago, the national average was $4.02 and Oregon’s was $4.28.