The U.S. average price for regular gasoline decreased last week, according to the Energy Information Administration, slipping three cents to $2.67 per gallon, but staying 44 cents above a year ago. Prices declined across all the regions. The prices on the West Coast were relatively unchanged at $2.60 and $2.91 per gallon, respectively. In California, the average slipped about a penny to $2.98 per gallon.

     The national average price for diesel fuel went down a penny to $2.80 per gallon, 14 cents per gallon below last year. Prices decreased in most regions of the country.  Prices on the West Coast slipped only a fraction of a cent, remaining at $2.75 and $2.91, respectively. The average in California was essentially unchanged at $2.97 per gallon.

     According to the Oil Price Information Service, the diminished demand for fuel is having lasting effects on the refining industry. The period of prolonged low refining margins has started to generate plant mergers and permanent idling in the U.S. refining business, including on the West Coast, where demand and supply has traditionally been balanced, if delicately. While mergers and acquisitions may make good business sense, California's very strict antitrust laws may forbid future business combinations. 

     The refining business world-wide is subject to government requirements to improve fuel quality, generally through removing impurities and contaminants. The cost of compliance with these rules can be enormous, and it is often the impending capital expenditure required to meet a new regulation that forces refineries to merge, convert to terminals or to shut down entirely.

     Refiners processed slightly more crude oil last week than the previous week, according to data from the California Energy Commission. Still, crude oil stocks saw a small build to 15.846 million bbl. The oil inventories were behind last year by a fairly small amount of around 100,000 bbl.  The price for crude oil ended at $77.40 for the period last week, up 36 cents over the prior week and $16.34 more than at this time last year. 

Chris Nobles

Commercial Fueling