Paying $4.79 a Gallon, California Didn’t Get the Cheap Gas Memo.


At least there’s this: The average price for a gallon of gasoline in the U.S. has fallen below $2 for the first time in four years.

That’s average — which California is not. As crude oil prices have tanked, depressed by the coronavirus pandemic and the market-share war between Saudi Arabia and Russia, at least a dozen service stations in the Golden State are charging more than $4, according to the tracker GasBuddy. One unnamed location in Santa Clara, near the heart of Silicon Valley, was on Monday demanding the most that GasBuddy’s research found in the state: $4.79.

According to AAA, only Hawaii has higher average prices than California, at $3.36 versus $3.06. That compared to the lowest of 95 cents at one outlet in Oklahoma and another in Wisconsin, according to GasBuddy. Meanwhile, in New York, just five stations are asking more than $3 and neighboring Connecticut doesn’t have a posting at more than $2.99, GasBuddy found — though suburban Connecticut residents will tell you they’ve seen signs for $3-plus.

The U.S. has always been a very mixed market when it comes to gasoline, with different taxes and smog-control regulations in different states. Another thing California and Hawaii have in common: They’re nowhere close to the shale formations producing most of the nation’s crude. In contrast, Texas — home of the oil-rich Permian Basin and almost a third of the country’s fuel refining capacity — boasts pump prices averaging about $1.75.

But wherever you are filling up, with the U.S. benchmark crude fetching just about $20 a barrel on the futures market — near the lowest level in 18 years — you should expect to see downward pressure at the pump, even in California.

“There’s clearly going to be a drop,” said Amy Myers Jaffe, director of the energy security and climate change program at the Council on Foreign Relations. Local supply and demand will play a role in the coronavirus pandemic. “It’s going to be regionally influenced because some people are more compliant with the shelter-in-place orders than others.”

In California, there have been mitigating factors. An explosion late last month at Marathon Petroleum Corp.’s Los Angeles-area refinery prompted wholesale gasoline prices in Southern California to jump at the time the most in seven weeks.

“And then Covid happened,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “California has a lot of catching up to do.”

It will always lag, though, price-wise. California adopted the nation’s cleanest fuel formulas in the 1990s in a bid to reduce its infamous smog. The side effect was cutting the state off from the national fuel market. Few refineries outside the state make the California-grade gasoline.

For all that, average gasoline prices actually declined more in California last week than nationally — 14 cents compared with 10 cents. De Haan said prices along the West Coast could fall as much as $1 a gallon over the next month.

“The West Coast without a doubt has the most distance for average prices to fall,” he said. How low, nobody knows.