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California gas prices near record-highs, but experts anticipate drop soon

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Madison Hirneisen | The Center Square

(The Center Square) – California gas prices have skyrocketed in recent days to near-record levels, but experts say consumers could soon see some relief at the pump.

California’s average price for a gallon of gas reached $6.425 on Wednesday, nearing the June record-high of $6.438, according to AAA. The Golden State’s average was more than $2 over the national average, which reached $3.831 per gallon on Wednesday.

The latest spike in California prices stems from a supply crisis in September when many refineries that had previously deferred maintenance earlier in the year “had to go down for maintenance” last month, while others closed for “unplanned maintenance,” according to Marie Montgomery, corporate communications specialist for AAA.

This situation resulted in “an unexpected shortage of the state’s ‘summer blend’ of gasoline a couple months before the state’s gas stations would normally be allowed to sell ‘winter blend’ gasoline,” Montgomery told The Center Square in an email.

The shortage caused gas prices to rise as much as 10-15 cents a day during the final week of September, leading Gov. Gavin Newsom to call on the California Air Resources Board to direct refiners to begin distributing the “winter blend” of gasoline earlier than usual. CARB followed the governor’s directive on Friday, approving the sale of winter-blend gasoline to begin immediately.

The last time California made a move like this in 2012, it resulted in prices dropping by 25 cents per gallon within two weeks, according to the governor’s office.

Montgomery said it will likely take some time for refiners to accomplish the switch to the winter blend, “but once the state’s gas stations begin receiving winter blend shipments, in theory the prices should stop dropping both because that blend is cheaper to produce and because the supply crisis should be over.”

Additionally, wholesale gas prices in Los Angeles began to drop significantly Wednesday, sloping down closer to the level they were when prices began spiking in September, Montgomery said. If that trend holds, she estimated prices will return to an average that is “well below $6 a gallon.”

OPEC announced Wednesday that it would reduce oil production by 2 million barrels a day beginning in November, stoking concern from analysts that the decision could cause gas prices to rise in certain areas of the country by 15-30 cents per gallon.

Patrick De Haan, a petroleum expert with GasBuddy, speculated Wednesday that, despite OPEC’s decision, prices would soon fall on the West Coast and in the Great Lakes.

“Good news, Cali! The worst appears to be over for California,” De Haan wrote in a tweet Wednesday. “Price differentials are plunging, with gasoline values down some 45c/gal. This will take a few days for stations to start getting the cheaper fuel, but lower gas prices are coming!”