Dear Jon: Quick gas price hike raises questions

Many of our viewers are seriously questioning this latest price hike after the refinery explosion at the Exxon/Mobil plant in Torrance last month. Could there be a conspiracy to raise prices?

I wish I had good news to report for this question, but with that refinery explosion in Torrance last month, it seems were doomed to see higher prices at the pump here in California.

A month ago, we saw $1.99 at the gas pump in Salinas. Now, we’re at $3.00 and rising.

I received a grim forecast from economist Tina Esparza-Luna of Hartnell College. She says this latest hike at the pump, for the most part, is on the refinery explosion in Torrance last month.

“It’s all about the refinery explosion, when that refinery exploded it significantly reduced the amount of gasoline that can be produced, particularly in the State of California,” says Esparza-Luna.

As consumers we might think this was intentional on the part of the refinery to jack up the price. After all, there’s a crude oil glut nationally and gasoline prices were at 10 year lows. Well, Esparza-Luna doesn’t believe that is the case as gas prices rise.

“The industry overall may be better off, but that one producer is worse off.” Says Esparza-Luna, “So it wouldn’t make sense for that one producer to destroy their refinery, because they’re losing all their money.”

In California, the Cap and Trade fees have been added into the price of gas this year. At that time in January we saw a brief .10 increase, but the gas prices continued to drop. One recent study says crude oil could drop to $20.00 a barrel as the glut continues. So crude is not the issue here. Esparza-Luna says it’s all about the refineries in California. Add to this the seasonal refinery shutdowns for cleaning and changes in gas mix in California and you get higher prices.

How serious is this?

“This is a game changer. Unfortunately gas prices are going to be up for the rest of the year, probably at least in the mid 3’s,” says Esparza-Luna.

So experts agree, unless more refineries start producing more gasoline for California, supply and demand will keep the price at the pump higher.

And to think just two weeks ago, we were talking about families saving $750.00 this year on gasoline bills. We may still save some at the pump, but not as much now.