Here’s why gas goes up to $6 a gallon in California even as prices go down elsewhere

California prices keep rising even as the national average drops slowly but surely – During the past two weeks.

Nationally, the average gas price settled at $4.24 on Wednesday, according to AAA, down from score high $4.33 per gallon set on March 11th. The national average daily has since fallen by a fraction of a penny – proving the old adage that gas prices are rising like a rocket and Falling like a feather.

Multiple markets

The main reason for the price discrepancy is that there are seven major wholesale gasoline markets in the United States: two in California, another in the Pacific Northwest, and the remaining four scattered throughout the rest of the country. This means, for those who live west of the Rocky Mountains, that prices are still on the rise or steady at best.

Prices rose 7 cents in Utah, which also gets pipeline gas from California, to $4.42, and were essentially unchanged in Washington, Oregon and Arizona.

A major factor in the current price hike was the unplanned outage at a major refinery in Torrance, California three weeks ago, which made an already tight market for gasoline even tighter, said Doug Shoppe, a spokesman for the Automobile Club of Southern California.

The loss of even one refinery could cause prices to rise in the West because capacity was steadily declining on the West Coast.

US Energy Information Administration data show that refining capacity in western states at the end of last year fell 12% from the end of 2019, before the pandemic, and decreased by 22% since the end of 2007, before the Great Recession.

Some of these refineries closed for financial reasons during those tough economic times. Currently Some are being converted to process renewable fuels, such as the Marathon Petroleum refinery in Martinez, California. This Gulf area facility ceased refining petroleum products in 2020 and will soon reopen as a renewable diesel refinery.

The loss of that facility, and others, in recent years also means that an unforeseen problem like the shutdown of Torrance could upset wholesale gas markets, said Tom Cluza, global head of energy analysis for the Oil Price Information Service, which tracks AAA gas prices.

Kloza said concern about stricter environmental regulations in Western countries is preventing oil companies from investing in refineries in the region due to fears they may be forced to close in the near future.

“The West Coast is a huge challenge right now,” he said. “They can use a little more refining power or demand a little bit less.”