$5 Gasoline

CNNMoney is reporting:

Drivers in California became the first in the mainland U.S. to pay an average of $4 a gallon for gas in the current price spike.

They probably will get lots of company soon. California prices reached $4.01 for a gallon of self-serve regular gas on Monday and continued higher to $4.02 on Tuesday, the first time since March that the price has been that high.

Only Hawaii and Alaska, with their limited access to refineries, had been above $4 a gallon before the recent price spike.

Other states are likely to cross the $4 mark in coming days. The average price in Connecticut and Illinois is now pennies away from $4, while Michigan, Washington, Oregon and the District of Columbia are close behind with prices above $3.80 a gallon.

The national average stands at $3.64 a gallon, up 16 cents in just the last week.

Last week, Gasbuddy.com forecast that the national average will rise by 30 cents a gallon by August. While that would leave the national average under the $4 mark, it won't matter to more than a third of drivers nationwide who could soon see their local prices above that level.

There are at least two story lines here.

First, CNNMoney is late in reporting this story. I came out to Southern California for a couple of weeks, arriving here about ten days ago. Gasoline was already over $4.00. California's increased state tax on gasoline went into effect on July 1, 2013. California makes about 71 cents on each gallon of gasoline sold; Exxon makes about 3 cents per gallon.

Second: CNNMoney finally said exactly what I said last year -- average prices mean squat -- it's the local price folks watch and their perception of what they pay. The average person sees $4.49 gas as "$5 gasoline."

While that would leave the national average under the $4 mark, it won't matter to more than a third of drivers nationwide who could soon see their local prices above that level.