Houston — Some of the retail gas stations across Northern California are dealing with long lines and empty storage tanks as the local power utility, PG&E, enacted planned blackouts this week. Meanwhile, in Southern California, wildfires on Friday seemed to be disrupting gasoline demand there.
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On Wednesday, PG&E enacted its Public Safety Power Shutoff in an attempt to prevent wildfires as winds speeds in the region increased and temperatures rose.
According to reports from local media outlets, including the San Francisco Chronicle, some gas stations in the Bay Area closed preemptively since the power cuts began because they cannot conduct business without any electricity. Other gas stations have remained open, but have run out of fuel as some drivers buy more gasoline than usual in anticipation of supply disruptions.
Albert Lundeen, deputy executive director for strategic planning and media for the California Energy Commission, said that the short term gasoline supply outlook was stable.
"We have not heard of supply issues at retail outlets or queuing of drivers waiting to fill up. At this time, there are no known issues at refineries either," he said via email Friday.
Two sources in the USWC gasoline cash market said Friday they agreed that, so far, no California oil refineries have seen any disruptions due to a power shut off. "Blackouts not yet impacting refineries," a broker said.
Although sources have said US West Coast refinery operations were unaffected by the power cuts, there was some impact on midstream operations. On Thursday, Kinder Morgan said that it had briefly shut down its pipeline from the greater San Francisco area to Reno, Nevada, according to a press release. Katherine Hill, a senior corporate communications specialist with Kinder Morgan, said via email, "the pipeline segment and associated booster stations impacted by the PG&E power outage regained power and resumed normal operations late Thursday night."
When asked, emergency response teams in the Northern California said they remain supplied with fuel. According to the respective spokespersons from the Humboldt Bay and Fortuna Fire Departments, regional shortages had no impact on their ability to respond to emergencies. "We get plenty of notice ahead of planned outages such as this and make all the preparations necessary to respond to emergencies," a spokesman said.
GASOLINE PRICES ALREADY HIGH
These black outs are occurring at a difficult time for California drivers, who have already been dealing with unusually high retail pump prices going into October.
The average retail price of gasoline in California has increased 60 cents/gal over the past three weeks, with the average retail gasoline price hitting $4.09/gal Monday -- the highest that figure has been since the week ended June 14, 2014, when the price was reported at $4.14/gal, according to a report from the US Energy Information Administration issued Thursday.
The EIA said gasoline prices in California were now $1.45/gal more than the US average and 45 cents/gal more than the West Coast average, the largest difference in these prices in EIA data dating back to May 2000. The EIA mainly attributes the price spike to unplanned refinery outages from September.
The EIA's take on the market aligns with data from S&P Global Platts, which showed California gasoline assessments at well-above seasonal norms in October. Most recently, Los Angeles CARBOB -- perhaps the most liquid gasoline cash market in the state -- was assessed at November NYMEX WTI crude oil futures plus 82.50 cents/gal Thursday, a 45.50-cent increase year on year.
LA FIRES DISRUPT DEMAND
While drivers in some parts of Northern California seemed to be dealing with hampered retail gasoline supplies, at the other end of the state, fuel outlets could be dealing with reduced demand. Local media outlets in Los Angeles reported Friday that thousands were being evacuated due to wild fires breaking out in the north of Los Angeles. At the same time, authorities were closing parts of major freeways, including the Northbound and Southbound 5 Freeway, the Southbound 14 Freeway, and the Northbound 405 Freeway.
Marie Montgomery Nordhues, a spokeswoman with AAA, said that it was unclear what impact these fires will have on gasoline demand, though it seemed plausible some gasoline consumption will drop. "It's true that some drivers will be less likely to take optional trips, but there is also a lot of commercial traffic in Southern California. It is simply too early to tell what impact these fires will have on demand."
A USWC gasoline broker was more confident that the fires will upset southern California gasoline demand. "Lots of the inland freeways in LA are closed. I am assuming lots of people are working from home" and several schools have closed, which should temper fuel consumption, he said.
On Friday morning, a USWC market source said that Los Angeles CARBOB traded at front-month NYMEX RBOB futures plus 75 cents/gal, a 7.50-cent drop from the Thursday assessment.
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