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California gas prices are now highest for any November on record.

Adding fuel to the fires of a dismal recession is a new fact from OPIS, the authoritative Oil Price Information Service: California is now paying the highest price for fuel of any November on record.  Normally gas prices peak at some time in June and then plummet from the peak by about a dollar a gallon in November and December.  That hasn't happened this year. Nationally, gas prices have dropped about 52¢ on average since mid June, but in California prices have only dropped about a dime.  Much of this is due to the intentional idling and maintenance of the Arco/BP refinery and a Chevron refinery in Los Angeles county (see story), but it is also due to massive fuel exports of surplus diesel and gasoline to South America.

The sustained high gas prices for 2011 will make this year one of the highest priced years on record in terms of average prices, and this is bad economic news. Almost every major recession in the last 50 years has been accompanied by high oil and fuel prices. Cheap energy is the foot on the accelerator of the American economy, and sustained recoveries rarely happen without a corresponding decrease in energy costs.

It's the same old story - three years ago refiners were claiming they couldn't make enough oil to meet California demand, and that gasoline had to be imported. They were exporting diesel and gasoline to keep prices high in California.  Today they're doing the same thing - supplies are restricted because of exports to South America, while massive refineries are being idled for routine maintenance.

This is the time of year when prices usually drop by about a dollar a gallon, but thanks to exports and intentional refinery shutdowns, diesel and gasoline remain at record highs.

Add to this the Italian and Greek debt crises, and a weakening U.S. dollar and the outlook for higher oil prices remains strong despite weak global demand for oil.

As for the short term, we might see price-cutting at local pumps of as much as 3.5¢ a gallon over the weekend, but real price relief -- the kind that has the power to reverse a deep recession --  is unlikely.

For More information, contact Charles Langley, Manager, UCAN Gas Project, (619) 610-9006