Wholesale Gasoline Shortage In California Causes Gas Stations To Shut Down: Hoarding Next?

5

Tyler Durden 

“The squeeze is on, and people are doing desperate things,” is how one independent described the situation in California. As Bloomberg reports, a shortage of supply along with drastically higher wholesale prices of gasoline has caused ‘mom-and-pop’ gas stations to close down as their margins are destroyed. Even larger firms, such as CostCo, are closing sites due to the shortages as Los Angeles and San Francisco gas prices jump 30-45c in a few days.

As one owner noted: “I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” and another added that “we’re going to start shutting pumps Friday, as gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”

The problem is likely a short-term one according to some as the temporary shutdown of local refineries (after Chevron’s Richmond refinery fire) and maintenance is completed but it is clear that even a short-term blip in wholesale prices (whether driven by local supply or global geopolitics) causes pain as it would appear we are close to ‘inelastic’ levels of demand.

  • *VALERO SAYS SUPPLY IN CALIFORNIA HAS TIGHTENED
  • *VALERO SAYS IT HAS TEMPORARILY HALTED SPOT SALES IN CALIFORNIA

California gas has not fallen as the national average has…

Via Bloomberg:

Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. (COST) are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.

 

Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, said by telephone. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said.

 

 

Prices Jump

 

Gasoline at the pump gained 8.3 cents to $4.315 a gallon in California yesterday, according to AAA.com, 53.1 cents more than the national average of $3.784. In Los Angeles the price was $4.347. Gasoline futures for November delivery on the Nymex rose 11.15 cents to $2.911 a gallon at 1:35 p.m. today, after falling yesterday to a 10-week low. Retail price movements tend to lag behind those of futures.

 

 

“I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” Ravi said. “If you come here right now, I’ve got some diesel left. That’s all. My market is open, but no gas.”

 

A Chevron Corp. (CVX) oil pipeline shut down last month, an Oct. 1 power failure at Exxon Mobil Corp. (XOM)’s Torrance refinery and units down at other plants have cut supplies in the market.

 

Spot California-blend gasoline, or Carbob, in San Francisco surged 30 cents to $1.40 a gallon over futures, also the highest level since at least 2007, at 1:12 p.m. New York time.

 

‘Not Worth It’

 

“We’re going to start shutting pumps Friday,” Sam Krikorian, owner of Quality Auto Repair in North Hollywood, said by phone yesterday. “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”

 

Exxon’s 150,000-barrel-a-day Torrance refinery may flare gases for a week as it restores production after a power failure that shut some units and slowed output from others, Gesuina Paras, an Exxon spokeswoman in Torrance, said by e-mail Oct. 2.

 

Chevron’s Kettleman-Los Medanos pipeline, which carries crude from Kern County to Northern California refineries operated by Royal Dutch Shell Plc (RDSA), Tesoro Corp. (TSO) and Valero Energy Corp. (VLO), remained shut after elevated levels of organic chloride were detected in the oil.

 

Phillips 66 (PSX) is also scheduled to perform maintenance on process units at its Rodeo and Los Angeles refineries this month, people familiar with the schedules said.

 

Chevron’s 240,000-barrel-a-day Richmond plant, the largest refinery in Northern California, has been running at reduced capacity since a fire Aug. 6.

 

’Squeeze is On’

 

The squeeze is on, and people are doing desperate things,” Bob van der Valk, an independent petroleum industry analyst in Terry, Montana, said by e-mail yesterday. “The mom- and-pop gas stations are having to close down from either not being able to obtain gasoline from their regular distributor or cannot afford the break-even price of almost $5 per gallon.”

 

 

Short-Term Problem

 

Van der Valk called the price surge a “a short-term problem.” Wholesale costs should start falling as Exxon’s refinery returns to normal operations and other plants finish maintenance.

 

 

“Everybody is concerned about what might happen,” he said. “The real question is: How long is this going to last and what can the state do?

 

 

The independent gas station owners are typically the first to run out of fuel and shut their pumps when spot prices surge because they often lack long-term contracts to buy from fuel suppliers at set prices, McKeeman said.

Via Contra Costa Times:

“It’s a combination of low inventories and multiple California refinery problems,” said Tom Robinson, head of Robinson Oil Corp. “Really since the Chevron Richmond fire, inventories have been tight. As other refinery problems occur, there isn’t much or any available inventory.

 

Retailers are not yet reflecting the wholesale price increases they have experienced, so unless supply problems improve quickly, retail prices will definitely be going up.”

This article first appeared at Zerohedge.

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5 Responses

  1. The elite globalist banking CABAL of the NWO that are members of the Illuminati are Zionist Jews. They are hiding behind a religious community and masquerading as Hebrews. Let me set the record straight: 1-A Jew is a religioun 2-A Hebrew is a race of people. 3-A Zionist is a political organization 4-An Israelite is a natiionality. This subject has to be approached with intelligence not to offend anyone. As I said before, I don’t believe it is the whole Hebrew race of people. It is a certain element. These people in the world of high finance are playing the race card by controlling the main stream news media. They feed people propaganda which is a form of brain washing. Not all Hebrews are International Bankers. To make that statement would be compared to saying that all Itallians belong to the Mafia. I compare the Central Banks, the IMF and the World Bank to a Financial Mafia.. The arms of the beast is the Central Banks, the IMF and the World Bank. The head is the United Nations. i am not a racist. I call on all legitimate Hebrews to root out the corrupt element from among you! If you tell a lie long enough, people will start believing it. You can put as much isms on it as you want. The definition of the word ism is doctrine. It is an internationa conspiritorial drive for power, on the part of the men in high places, willing to use any means to bring about their desired aim, Global Conquest. It is the personification of evil. The world is going to go to a cashless society with a system of debits and credits on a debit card with a computor chip in it with all your account information. Transactions will be done electronically in cyber space. This system is already being introduced slowly. The next step will be a computor chip on your right hand or forehead. Just step-up and take your number. The choice is your’s. Any one that takes that number before he can buy and sell will not be written in the lamb’s book of life. They will be destroyed in the Great War of God the Almighty in the battle of Armagedon!

  2. DC says:

    The elite (Illuminati & Club of 300 The Cabal Ruling Class THE NAZIS OF THE FOURTH RIECH) who control the IMF (International Monetary Found) want to create massive debt before the crash. The endgame is control. The elite are buying paper currencies worldwide. Because they want countries to go bankrupt. They will hold all paper bonds and notes. So they can step in like the banks and reposes properties and assets. They want every country, every bank, every state, and every city. To be in debt so when they pull the strings and cause the crash by selling all assets (Inside trading). The borrowers will be bankrupt then the elite(NAZIS) will step in and own everything by buying up all other assets for pennies on the dollar. And implement a new world order system (A new system of global monetary control). The IMF (International Monetary found) more like (International Mafia Foundation) lends money to the world. The money is worthless assets and counterfeit. Spawned from the financial contagion of the fraudulent derivative stocks that caused the 2008 crash. This is why NATO & co. Killed Gaddafi because he refused to take money from the IMF. Gaddafi had his own bank with a smart money system backed by gold. He refused to buy their debt! This is the same reason why President Kennedy was killed on November 22, 1963! It’s money borrowed from the Chinese on top of more borrowed money to support the military’s endless wars and bank bailouts. The Federal Reserve shall continue to print money (Print Print Print) backed by nothing and charge what ever percent they want (Inflation is taxation with no representation). The elite (NAZIS) will own every bank and country by putting the population in massive debt. So when they default the banks and states will reposes the borrower’s property and land. Then they will rent it back to the borrower double the cost. They will also devalue the dollar thus creating a climate of greater job loss and an even greater loss of purchasing power. The dollar defaults and the banks reposes the borrower’s property and real-estate. Then the banks rent it back to the borrower and charge what they want. They’ll devalue the currency so debts double and can not be paid. By the end of 2012 all private fortunes will be gone. If it’s written on paper it’s worth the paper it’s written on. Government dependants will continue to get checks until the dollar defaults. Taxes and inflation will rise making it difficult to make payments on debt free property.

  3. obamalovesfacefarts says:

    ha ha hee hee ha ha

  4. Higher gasoline prices at the pump translates into higher commodity prices. The age of the robber barons is being repeated. One of the contributing factors that are causing higher gas and diecel prices is the political hacks in Washington did not enforce anti trust laws. When they approved of the oil companies mergers, they created a monopoly. Now there is fewer oil companies and less competion. The shortages of gasoline and higher prices is causing people to panic and hoard gas in aticipation of higher prices. It is making a bad situation worst. The political hacks in Washington are doing absolutely nothing to alleviate the problem because it is just before the November ellections and there is a lame duck session occupying the congress. I compare the financial and economic crisis as a run away freight train that is headed for a crash.
    I see storm clouds gathering on the geo political horizon. Unless there are major reforms in Washington the U.S. is headed for the greatest depression in the history of the world. It is going to make the last depression look like a boom. The U.S. is currently experiencing a double dip, double digit inflationary recession that is progressing into a full blown depression. Those of you who are out there can stick your head in the sand like an osterage or have horse blinders on with a coachman at the reigns, but you are going to know when it hits you right between the eyes. Wake-up America before it is too late! The only way to effectively make changes is with a grass roots movement. It will have to come from the bottom; not from the top because all the political hacks are poll parots that mimick the agenda of the international finance hyenas.

  5. Stan Sikorski says:

    Lots of excuses floating around. Notice there is no “oil shortage”. It’s that refineries can’t process crude into gasoline fast enough. Anyone that tells you there is an oil shortage is either a fool or has something to gain by doing so. There is enough oil in Alaska to fuel America for the next 200 years WITHOUT foreign supplies. If the profit mongering oil companies played it straight, we would be paying less than $1.00 a gallon. It’s all a scam – another control mechanism.

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