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 states 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. Costcos 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 its the West Coast, Jeff Cole, Costcos vice president of gasoline, said by telephone yesterday. Were obviously extremely disheartened that we are unable to do this, and were 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. Thats 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 companys headquarters in San Antonio, said by e-mail.
Of particular interest is this statement by these three station owners:
I can get gas, but its going to cost me $4.90 a gallon, and I cant sell it here for $5, Ravi said. If you come here right now, Ive got some diesel left. Thats all. My market is open, but no gas.
Were 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. Theres no sense in staying open. The profit margins are so low its not worth it.
Jim Li said yesterday that he may stop selling gasoline at his independent station, Best Auto Care, in San Francisco. Hes charging $4.59 a gallon for the fuel, and Im still losing money, he said. Wholesale prices are going up so quick that theres 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.