When Chevron's Richmond refinery caught fire at 6:45 PM, August 7, the flames and smoke spewed 4,000 feet into the air and sent hundreds of nearby residents to local hospitals with breathing disorders. The price of surplus gasoline in California immediately skyrocketed, sparking fears of a "superspike" in retail gas prices.
What we saw was the beginning of a superspike. In the following eight days, gas prices screamed upward in San Diego at an average daily rate of 2.7¢ per day, moving from $3.86 a gallon on August 7, to the current average of $4.10 a gallon today.
Now it appears that prices are leveling off. In fact, prices should begin to drop starting today or tomorrow. We predict (hopefully) that prices will decline from two to five cents over the weekend.
According to an article by Morgan Lee in today's Union Tribune, Gas prices at the wholesale level are normalizing and dropping on news of abundant supplies and depressed demand from California motorists and businesses. It is a "good news/bad news" scenario: The good news is that there is plenty of gasoline despite a huge loss in the supply chain. The bad news is that the reason that there is so much surplus gasoline available is because the economy is still anemic.