California Gasoline Situation -- The "R" Word -- Rationing

The Drudge Report linked them first -- at least that's where I first saw them, but I see that Yahoo!Finance is now carrying the same stories.

Apparently price spikes and shortages.

First, the story on an 8-cent price spike:

A gallon of regular at the station was selling for $4.79, up from $4.59 the day before. Premium gasoline was $4.99. 

Throughout California, the average price of a gallon of regular gasoline jumped 8 cents overnight to $4.32 and was up 18 cents during the past week, according to the AAA's Daily Fuel Gauge. 

Analysts said it was poised to quickly soar past $4.37 a gallon — the high so far this year — after refinery outages and pipeline problems left the state short on supplies.

So, $5.00 gasoline in California -- just as we go into the final stretch of the election season. California voters seem content/satisfied. President Obama will carry the state easily. And pollsters thought folks would be swayed by high gasoline prices. Not!

Then the story on shortages and outright outages:

Valero Energy Corp. said Thursday it has stopped selling gasoline into the California spot market because of a product shortage resulting from a spate of refinery outages in the state.   

Valero, the largest refiner in the U.S., took the unusual step after accidents and maintenance have caused shutdowns at several California refineries, including Chevron Corp.'s 245,000 barrel-a-day refinery in Richmond and Exxon Mobil Corp.'s 149,500 barrel-a-day refinery in Torrance. 

California wholesale gasoline prices have climbed on the shortage resulting from these shutdowns, and reached an all-time high of $4.10 a gallon Thursday. 

Valero operates two refineries in California with a combined capacity of 213,000 barrels a day. These refineries have not suffered outages. California is already grappling with an average retail gasoline price of $4.31 for a gallon of regular, higher than any state except Hawaii, according to the AAA Fuel Gauge. 

Valero's withdrawal from the broader spot market will exert even more upward pressure on prices. "This is a serious problem," said Richard Hastings, macroeconomy strategist at Global Hunter Securities. "Five dollars a gallon is a plausible concept at this point, and it won't be $5 at the airport filling station—it will be all over the place."

But as an analyst noted back in August, as long as people only buy one gallon the price is not that big a problem; it's when they buy multiple gallons at a time.

"If you look at just buying one gallon of gas, it really doesn't hurt us at all, but the problem is a lot of US consumers are buying multiple gallons of gas every single day." -- analyst, August 30, 2012. 

And finally the Bloomberg story of service (gas) stations just closing their stations as oil companies start rationing supplies:

Low-P, a gasoline station in Calabasas, California, 30 miles west of Los Angeles, stopped selling unleaded gasoline Oct. 2 and ran out of high-octane and medium-octane fuel yesterday, John Ravi, the station’s owner, said by phone yesterday. 

Ravi said he posted an “Out of Gasoline” sign on each pump and took down the prices outside his shop. 

“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.” 

“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.”

And that's the way it is, Walter Cronkite