Here’s why you just saw San Diego gasoline prices jump 6.7 cents in one day
It didn’t take long for last weekend’s attack on oilfields in Saudi Arabia to affect gasoline prices in San Diego.
The average price of a gallon of regular gas jumped 6.7 cents to $3.725 Wednesday, the largest increase in a single day since July 14, 2015, according to AAA.
Some California motorists, who already pay the highest average price per gallon in the country, noticed the difference.
“It’s another thing people here have to take into account,” said Sean Cartin of East Village said while checking his car at a downtown Shell station. “But (gasoline) is a commodity and people have to pay for it to get around.”
Saudi officials in a news conference Wednesday blamed Iran for the attack, alleging that 18 drones and seven cruise missiles were launched on two key installations that account for about 5 percent of the world’s daily production of crude oil. Iran denied any involvement.
Energy analysts estimate the price of crude accounts for about two-thirds of the price of a gallon of gas.
Prices in San Diego remained stable in the immediate aftermath of the attack, with prices virtually unchanged from Sunday to Monday. The average price of regular went up 1.5 cents a gallon Tuesday before surging on Wednesday.
“Retailers don’t like to increase prices in spike amounts, like 10 or 12 cents a gallon, overnight because that’s not really good for their business — they get yelled at by all their customers,” said Jeffrey Spring, corporate communications manager for the Auto Club of Southern California. “And so we may see more of a moderate increase, 6 cents here, 7 cents there until we see how things shake out.”
In an effort to calm rattled oil markets, Saudi Arabia’s energy minister told reporters earlier this week the kingdom had restored about 50 percent of production from the damaged facilities and will use reserves to shore up supplies. He added that normal production of 9.8 million barrels a day should return by the end of this month.
Spring said drivers can expect to see prices go up another 13 cents to 18 cents a gallon over the coming weeks.
“It’s kind of a wait-and-see game, to see if the Saudis can really follow through on returning to full production,” he said. “I think, depending on how the oil markets react, we may see this spike today, maybe see another increase tomorrow and then it may plateau a bit.”
Prices moved up across the country because, even though U.S. oil production has ballooned in recent years, gas prices remain linked to global supply and demand.
The national average price for regular is $2.651 per gallon while the average price in California is $3.701 a gallon, according to AAA. Hawaii comes in second at $3.659 a gallon.
California prices are more prone to a disruption because the Golden State has no direct pipeline connections to receive oil from Texas or the Bakken shale formation in North Dakota. As a result, California is more reliant on overseas oil.
According to the California Energy Commission, 57.5 percent of crude oil supply to California refineries in 2018 came from foreign sources and Saudi Arabia accounted for more than one-third of that (134.8 million barrels last year).
West Coast markets also have to compete with Asian markets for Saudi oil.
“California is an energy island,” said Kevin Slagle, vice president of strategic communications at the Western States Petroleum Association, a trade group representing oil companies in five states. “We produce about 30 percent of what we use in the state. The other 70 percent comes from foreign or other domestic sources (such as Alaska). Without pipelines, without trucks, without oil flowing in, you have to produce it or import it.”
In one possible sign of relief, gas stations in October start their transition from California’s more expensive summer blend of gasoline to the less pricey winter blend.
Spring said the switch from summer to winter blends usually saves motorists about 10 to 12 cents a gallon. In the meantime, he offered some advice to avoid the brunt of higher gas prices.
“Consumers just need to look for the lower price at different gas stations, drive moderately, try to conserve on your gasoline use by not doing those jack rabbit starts at stop lights and stop signs and just take it down a notch,” Spring said.
Average price for regular gasoline in San Diego County
Sunday, Aug. 15 $3.644
Monday, Aug. 16 $3.643
Tuesday, Aug. 17 $3.658
Wednesday, Aug. 18 $3.725
Source: AAA of Southern California