If you’ve noticed higher gasoline prices recently, you’re not alone in feeling that way.
Gas prices in the San Diego region have risen by an average of 19.7 cents per gallon since December 23.
The average price for diesel fuel is also expected to exceed the $5 mark for the first time in over two months.
As of Thursday, the average price for a gallon of regular gas in San Diego was $4.591, according to AAA, with prices rising for 15 consecutive days.
“It’s been a steady increase,” noted Patrick DeHaan, head of petroleum analysis at GasBuddy.
Analysts attribute this rise primarily to California refineries starting their annual switch from winter-blended gasoline to the state’s exclusive summer mixture. The summer blend’s low-volatility formula reduces smog but is costlier.
The term “summer blend” can be misleading, as the California Air Resources Board mandates that gas stations in Southern California utilize the less-polluting gasoline from April 1 to the end of October.
Thus, despite it being February, refiners begin transitioning to the summer blend early in the year to ensure summer fuel reaches retailers by the end of March.
“They aim to flush out winter gasoline in the next couple of weeks because it’s complex to remove winter gasoline that can’t be sold,” DeHaan explained, adding that most stations will likely start receiving summer gasoline in two to three weeks.
He anticipates gas prices may rise another 10 to 20 cents per gallon—barring any unforeseen refinery shutdowns, accidents, or international incidents that could disrupt the petroleum market.
The average price for a gallon of diesel fuel in San Diego was $4.978 on Thursday, an increase of nearly 16 cents from a month prior.
This surge is unrelated to winter/summer blends but rather a result of tight diesel supplies due to the recent deep freeze in other parts of the country.
Although few passenger cars use diesel fuel, its price impacts everyday consumers, as trucks, trains, and shipping services rely on diesel to transport goods. Any rise in diesel prices is likely to be passed on to customers.
“The economy relies on diesel, not gasoline,” DeHaan stated. “Diesel and jet fuel are quite similar. These heavier fuels drive the economy.”
Denton Cinquegrana, chief oil analyst at OPIS, an organization that provides data and forecasts on global energy, mentioned that California gasoline prices may reach “a bit of a plateau, but the overall trend seems to be upward.”
He pointed out that Phillips 66 has recently closed its twin refinery in the Los Angeles area. Furthermore, Valero still plans to shut down its 145,000-barrel-per-day refinery in Benicia by the end of April.
Together, the Valero and Phillips 66 facilities account for about 18% of the state’s crude oil capacity. While fuel imported from other countries can help bridge the gap, these refinery closures may make the state more susceptible to price fluctuations.
“There are many electric cars, but California still consumes significant amounts of fuel,” Cinquegrana remarked. “The state has become much more dependent on gasoline imports and components needed for producing gasoline that can’t just appear overnight… It’s a precarious situation.”
To address concerns over gasoline supplies, Sacramento lawmakers—prompted by Gov. Gavin Newsom—passed Senate Bill 237 last year, which includes measures to enhance crude oil production in the state, especially in the Bakersfield area, where there is a high concentration of oil rigs.
In response to worries about California’s gasoline supplies, Kinder Morgan and Phillips 66 recently announced plans to construct the Western Gateway Pipeline to bring fuel to western states like Arizona and ensure more oil production remains within California.
This project has attracted significant interest from potential investors and shippers, but it will face numerous regulatory challenges before construction can start.
“These plans are still in early stages,” DeHaan said. “It may take at least 18 months for these projects to materialize, assuming everything goes perfectly.”
For some comfort, gas prices in San Diego are currently lower than those in the Bay Area.
The average price per gallon in San Francisco was reported at $4.798 on Thursday, nearly 21 cents higher than in San Diego.
On a national level, the average price came to $2.944, compared to California’s statewide average of $4.545, the highest in the nation.
According to the U.S. Energy Information Administration, state taxes and fees on gasoline, as of January 1, ranged from a high of 70.9 cents per gallon in California to a low of 9 cents per gallon in Alaska.
