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Gas prices surge above $6 a gallon in some Bay Area cities

Gas prices surge above $6 a gallon in some Bay Area cities

Hold your horsepower! The average price for a gallon of gas in California surged past the $6 mark Thursday, with drivers in San Mateo, San Francisco and Marin counties seeing some of the most painful spikes in the Bay Area.

The state’s average price of $6.03 per gallon represented a 19-cent jump over Tuesday, marking the first time since last fall that the cost has topped $6, according to AAA data.

San Mateo’s average price jumped in two days from $5.67 to $6.04 a gallon, while San Francisco’s leaped from $5.68 to $6.03. Marin’s cost ballooned to $6.07 from $5.69.

Dawn Cusulos, who commutes most days from her home in San Bruno to San Francisco, said the cost of filling up her teal Ford Bronco has spiked from $60 to $80. “You don’t want to drive as much,” Cusulos said at a San Francisco gas station charging $5.79 for a gallon of regular. “But I kind of have to. I’m a Realtor, so I just have to show (properties) when I have to.”

Other Bay Area counties may not have seen prices exceed $6 on average Thursday, but they shared the pain of the abrupt state-wide boost. Santa Clara’s average price soared to $5.89 on Thursday from $5.58 on Tuesday. Alameda hit $5.90 from $5.63, while Contra Costa surged to $5.92 from $5.62.

The financial pain of filling up a tank isn’t lost on elected lawmakers in Sacramento.

Gov. Gavin Newsom this week directed state regulators to start developing penalties to combat purported price-gouging by oil refiners and ordered state air-quality officials to try to boost gas supplies and lower prices by allowing earlier sales of more-polluting but simpler-to-produce winter-formula gas.

“Oil companies are ripping you off, and we’re going to get to the bottom of it,” he said. “Big Oil can’t hide anymore.”

John Treanor, a AAA spokesman, described the Bay Area’s 30-cent jump in prices in 48 hours as “an unusual increase.”

Across much of the U.S., gas prices are dropping as is usual for this time of year, when winter-formula gas blends start hitting the market and demand slides after the summer driving season, Treanor said. California sees cheaper gas around this time, but high global crude oil prices and maintenance of California refineries are standing in the way, Treanor said.

One regulator, the California Energy Commission’s Division of Petroleum Market Oversight in a letter to Newsom last week on spiking gas prices blamed global crude costs, refinery maintenance that refiners “did not adequately prepare for by increasing inventories and imports,” and an “unusual spot market transaction” Sept. 15 that drove up gas prices nearly 50 cents a gallon.

Kevin Slagle, spokesman for the Western States Petroleum Association, said maintenance is “vitally important for the safety of employees and the community and the efficiency of producing the fuels, and planned carefully in advance.” That planning includes “the consideration of supplies,” Slagle added.

Patrick De Haan, head analyst at gas-price-data company GasBuddy, said that four of 14 California refineries appeared to be down, two for what seemed to be unplanned maintenance.

The state’s environmental requirements for specific gas blends and a decline in the number of refineries from 20 in 2008 to 14 today make it much harder to keep adequate supplies and lower prices when refineries’ production slows or stops for maintenance, De Haan said. The unusual transaction likely resulted from a refiner closing for unplanned maintenance and having to buy a large quantity of gas from a competitor at a premium price to meet contractual sales commitments, De Haan said.

Newsom, as prices were spiking, on Wednesday issued a directive to the California Air Resources Board, ordering it to allow sales of winter-formula gas — which causes more smog because it contains more butane — before the official transition date from summer gas at the end of this month.

That transition went into effect Thursday, and it should lead to gas prices starting to drop in three to five days, De Haan said. One closed refinery is scheduled to open in mid-October and another at the end of October, which should also lead to lower prices, as will the re-opening of the facilities closed for unplanned maintenance, De Haan said.

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Newsom wrote in his directive that the transition would not provide long-term relief from “volatile gasoline prices that spike far out of proportion to expected fluctuations based on supply and demand — a pattern we have seen emerge last September and this September.”

He ordered the Petroleum Market Oversight division of the energy commission to bring him by Jan. 1 initial proposals to “protect Californians” from “market-distorting behavior” by refiners and petroleum traders. And he ordered the commission to start a regulatory process to impose penalties against refiners for price-gouging.

Slagle said probe after probe has concluded that high gas prices come not from gouging but from market forces, and in California, from high costs from regulations, taxes and state policies. “It costs five times more to refine fuels in California than any other part of the country,” Slagle said.

Staff writer Ethan Varian contributed to this report.