California Gas Stations Shut as Oil Refiners Ration Supplies

Refineries outages are causing gasoline shortages at the pumps in California.

[From California Gas Stations Shut as Oil Refiners Ration Supplies- Bloomberg – ]
Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. (COST) are beginning to shut pumps as the state’s oil refiners started rationing supplies and spot prices surged to a record.

Valero Energy Corp. (VLO) stopped selling gasoline on the spot, or wholesale, market in Southern California and is allocating deliveries to customers. Exxon Mobil Corp. (XOM) is also rationing fuel to U.S. West Coast terminal customers. Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular.

The gasoline shortage “feels like a hurricane to me, but it’s the West Coast,” Jeff Cole, Costco’s vice president of gasoline, said by telephone yesterday. “We’re obviously extremely disheartened that we are unable to do this, and we’re pulling fuel from all corners of California to fix this.”

Spot gasoline in Los Angeles has surged $1 a gallon this week to a record $1.45 a gallon premium versus gasoline futures traded on the New York Mercantile Exchange, data compiled by Bloomberg show. That’s the highest level for the fuel since at least November 2007, when Bloomberg began publishing prices there. On an outright basis, the fuel has jumped to $4.3929 a gallon.

“Product supply in California has tightened, especially in Southern California, due to refinery outages,” Bill Day, a Valero spokesman at the company’s headquarters in San Antonio, said by e-mail.

Of particular interest is this statement by these three station owners:

“I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” Ravi said. “If you come here right now, I’ve got some diesel left. That’s all. My market is open, but no gas.”

“We’re going to start shutting pumps Friday,” Sam Krikorian, owner of Quality Auto Repair in North Hollywood, said by phone yesterday. “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”

Jim Li said yesterday that he may stop selling gasoline at his independent station, Best Auto Care, in San Francisco. He’s charging $4.59 a gallon for the fuel, “and I’m still losing money,” he said. Wholesale prices are “going up so quick that there’s not even any margin to make any money at all,” he said by telephone.

This is exactly the type of thing we’ll see when we have high inflation and price controls. Raw materials or the costs of wholesale product will cost too much when compared to what the vendor can sell it for on the retail end, and when they happens, they stop selling.

Notice how fast this occurred. This is why we need to be prepared before there’s a problem. Don’t wait until something happens before getting prepared.  With so many people reacting to the event, it’s likely you won’t have time to get your preps if you wait until the last minute.


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