California gas prices are averaging over $5 a gallon. How long will cost remain this high?
The $5 gallon of gasoline is back, and it’s likely to be around for a while.
“The price is probably going to bounce around the $5 mark for the next several weeks,” said Patrick De Haan, head of petroleum analysis for GasBuddy, which tracks price trends,
In about a month, as summer demand eases, he said there could be “downward pressure” on prices. During the fall, as California switches to a less expensive winter gasoline blend, prices could also slide.
But first, the forecast is for more pain at the pump. A gallon of regular gasoline in California cost $5.02 on Wednesday, AAA reported. That’s up a dime from a week ago and 18 cents from a month ago. The national average Wednesday was $3.80 a gallon.
Some comforting news: California’s average is still 56 cents a gallon less than a year ago and well below the record of $6.44 in June.
”I don’t see record prices for anyone,” De Haan said.
The summer price spike, which has been somewhat less steep than the national average, results from several factors.
Demand is up. The U.S. is ending its release of oil from the Strategic Petroleum Reserve. There are worries about cutbacks from Saudi Arabia and Russia, among the world’s largest oil producers.
“Extreme heat is driving up prices, along with OPEC beginning to cut production only recently, inventories are also a little lower now than at the same time the previous year,” explained Gokce Soydemir, Foster Farms endowed professor of business economics at California State University, Stanislaus.
Sanjay Varshney, professor of finance at California State University, Sacramento, saw nothing unusual, calling the increase “just the normal creep up you see in the summer.”
He saw no serious threats to price trends, mentioning only demand pressure should China’s growth accelerate more than expected.
The average does remain slightly below $5 in several California areas. In the Sacramento region,the average Wednesday was $4.94. Fresno averaged $4.92 and Modesto averaged $4.79. The San Luis Obispo area, though, saw prices averaging $5.30.
Some forecasters warned that while prices should stabilize in a few weeks, several risks remain. Refineries could go out of service. Extreme weather could force shutdowns. Suppliers could cut back further.
Ministers from the Organization of the Petroleum Exporting Countries and 10 other countries that form OPEC+, meet Friday, and are not expected to make any policy changes.
This story was originally published August 3, 2023 at 5:00 AM with the headline "California gas prices are averaging over $5 a gallon. How long will cost remain this high?."
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