San Diego gas prices increased 3.3¢ a gallon since Monday, matching the rate of increase we saw during the entire month of December in 2012.
We predict that gas prices could climb as much as 5.5¢ a gallon by Monday, despite reports of healthy inventories of gasoline on the West Coast, and relatively stable oil prices.
On Monday morning, the market barely seemed to have a pulse. The three factors came into play:
had a pulse" and
predicted minimal changes. Of course on monday night, we learned
that then Valero pile on with its own negative report.
The result? Oil and gas markets that didn't seem to have a pulse are
now being closely watched for signs of cardiac arrest.
1) Chevron was reported as having problems with its FCC unit (Fluid Catalytic Cracking unit), at its massive El Segundo refinery. When Chevron sneezes the entire market gets a cold.
2) Algeria: Ten Americans are being held hostage at a natural gas plant in Algeria. This has resulted in a $1 a barrel increase in Brent and U.S. crude. Oil analyst Bob van der Valk warns that Nigeria is a major oil producer, too, and that the effect of the uprising could have a ripple effect. Previous mulsim insurgencies in the 1990s resulted in the loss of more than 100,000 lives. So far, oil has only moved up a dollar a barrel since Monday, but natural gas prices are skyrocketing, and oil prices are expected to follow if tensions increase.
3) Closer to home, the problems at Chevron's El Segundo FCC helped spike prices, but Valero also added fuel to the fires of higher prices with a report that its 78,000 barrel-per-day FCC unit was also failing.
The result has been a slight increase in average wholesale prices for the independent unbranded dealers, an increase for branded stationsof about a nickel.
Historically, oil jitters translate into price hikes (or plausible cover for price hikes) in California. We often see price spikes even if the relationship between global oil supplies and West Coast refined gasoline are completely irrational.
Hopefully this price spike will fizzle out as local markets come into line with local market realities, but the relationship between "reality" and price in California is more often than not a very slippery proposition.
For those reasons, we are calling the market up in the next few days.