Southland motorists have welcomed steadily falling gasoline prices in recent
weeks after being hammered by record highs in early October.
The relief arrived in time for holiday travelers who have already hit the
road for Las Vegas, San Francisco and other locales. And it appears the lower
prices will hang around for another couple of months, experts say.
On Wednesday the average price for a gallon of regular unleaded gas in
the Los Angeles-Long Beach region was $3.59, down 21 cents from $3.80 a month
ago but up a penny from $3.58 a year earlier, according to the AAA Daily Fuel
Gauge Report.
The region hit an all-time high on Oct. 9 when a gallon of regular topped
out at $4.71. The price spike was fueled by low inventories and refinery
problems.
The Inland Empire -- which posted an all-time high of $4.69 per gallon on
Oct. 8 -- has also experienced a downward trend in recent weeks.
On Monday, the average price for regular in the two-county region was
$3.55 compared with $3.78 a month ago and $3.53 a year earlier.
The drop in prices couldn't come soon enough for Nick Nicassio, owner of
Nick's Limousine Service in Arcadia.
"When prices are high it's a killer," he said. "There's nothing you can
do. You can't raise your rates one week because gas prices go up, and then
raise them the next week because they've gone up again. My clientele wouldn't
accept that."
Nicassio opted to bite the bullet -- and it was painful.
"I have a fleet of five Lincoln Town Cars, and my fuel cost is normally
$3,800 to $4,200 a month," he said. "But when gas was at its peak I was
spending $5,800 to $6,000 a month on fuel. I'm glad it's gone back down
again."
High gas prices are also painful when you're in the furniture business.
Jim Boyd, a sales associate and manager at Al's Discount Furniture in
Woodland Hills, said his company makes about 50 deliveries a week. When gas
prices spike, it adds up quickly -- not just for Al's but for customers as
well.
"When prices peaked, people just quit shopping," Boyd said. "When you
have to spend $60 to $80 for a tank of gas, that gets expensive. When everyone
quits shopping that cuts our business down by about 30 to 40 percent."
Boyd said Al's opted not to increase its fee for deliveries.
"There's a saying in this business that you can't take the margin to the
bank," he said. "We just had to make up for it in volume."
Boyd said the recent drop in gas prices has brought back much of his lost
business.
Figures from the California Energy Commission reveal that California's
production of gas for in-state use was 6.2 million barrels for the week that
ended Dec. 14, down 9.1 percent from the previous week but up 3.5 percent from
a year earlier.
California refineries also produce gas for use in Oregon, Arizona and
Nevada.
That production hit 768,000 barrels for the week that ended Dec. 14, up
18.9 percent from the week before and up 62.7 percent from a year earlier.
The commission also tracks gasoline inventories, and a chart on the
agency's website shows that California's inventory of gasoline has been
trending upward since late September.
California had more than 6.5 million barrels of gasoline in stock as of
Dec. 14. That was up 4.4 percent from the week before and up 25.6 percent from
a year earlier.
"We're well above average for this time of year in inventories,"
commission spokesman Rob Schlichting said. "We've got plenty of supply, so
prices should continue to fall."
That may be true for now. But Bob van der Valk, a fuel pricing analyst,
said prices will begin heading up again in early 2013.
"On Feb. 14, California refineries have to stop making the winter blend
of gas and start making the summer blend," he said. "The first shipment will
go out at the end of February, and it will be at the terminals by March."
The turnaround often disrupts output at refineries, in some cases
necessitating a brief shutdown. Plus, refineries make about 10 percent less
gasoline per barrel during the summer since the extra refining process
vaporizes some of the product, van der Valk said.
"You can get 22 gallons of the winter blend in a barrel, but just 20
gallons of summer blend per barrel," he said. "We'll be up over $4 a gallon by
Memorial Day."
But for now, lower prices are the norm. A Food 4 Less in Long Beach was
selling gas for $3.29 per gallon Wednesday, while it was $3.31 per gallon at
an Arco station in Azusa.
The lowest prices in San Bernardino County could be found at Costco in
Rancho Cucamonga and at Sam's Club and Arco in Ontario, all of which were
selling regular for $3.31 per gallon.
Those lower prices are one reason the Automobile Club of Southern
California has projected an all-time high for Christmas/New Year's Eve travel
this year. Nearly 7.3 million Southern Californians are expected to travel
through the end of the year.
Eighty-eight percent of them are expected to travel by car, with Las
Vegas, San Francisco and San Diego among the top destinations.
The price of oil rose sharply Wednesday on higher U.S. home prices and
hopes of a budget deal in Washington. U.S. benchmark crude jumped $2.37, or
2.7 percent, to finish at $90.98 per barrel in thin post-Christmas trading in
New York.
Gasoline was at its lowest price for the year on Dec. 20, at an average
of $3.22 a gallon.
$3.59
Average price for a gallon of regular unleaded gas in the Los
Angeles-Long Beach region Wednesday.
$3.80
Price for a gallon a month ago, compared with $3.58 a year earlier
$4.71
All-time high for the region Oct. 9. The price spike was fueled by low
inventories and refinery problems. Source: AAA Daily Fuel Gauge Report
Staff Writer Andrew Edwards and The Associated Press contributed to this
report.
