Gas prices edge below $3 a gallon

Charles Langley - Today UCAN's index of San Diego gas prices showed that regular unleaded had edged below $3 a gallon to a new average of $2.999, an incredibly slow decline for this time of year.

Under normal market conditions gas prices drop very quickly between October and mid-December, but this year, a highly questionable rash of refinery fires has limited the supply of gasoline in Southern California, keeping prices at artificially high levels.

According to a report today by OPIS - the Oil Price Information Service - the unofficial organ of the oil industry, refineries in California are operating far below capacity:

"Market watchers say the West Coast deserves special scrutiny in the next few
weeks. Refinery processing rates are below 75% of capacity. Gasoline production
is slightly lower than last year, and even bearish traders and marketers would
argue that demand is up at least a percentage point or two. If refinery
problems develop, relief from foreign ports wouldn't be instantaneous."

TRANSLATION - The big refineries know that making too much gasoline is bad for business. By minimizing production they can create the shortages that drive prices higher before foreign companies can smell the money and begin shipping gasoline to California.