World Events Impact California Gas Prices

Prices rising faster than expected

Very little oil from Iraq is exported to California, but when there are problems in the volatile Middle East, gas prices in San Diego start rising.

"Fear absolutely drives prices," said gas price analyst Charles Langley, "and what we are seeing is the fear factor right now."

Langley said problems in Iraq will no doubt impact world prices, but should it happen within days of unrest?

"What's so absurd about this is it takes about 90 days to get oil from the Middle East," said Langley, "So for our gas prices to go up today because oil prices went up today is kind of ridiculous."

While Langley finds it difficult to understand, he's not alone.

Brad Spilkin filled up his car with gas Friday because he heard prices might be going up, but he admits, he doesn't understand why.

"What happens in the world, I'm on the bottom of the totem pole," said Spilkin. 

Another driver Mike Boardman said he's tired of trying to make sense out of it.

"It doesn't take hardly anything to make them go up," he said.

Less than 15 percent of oil from Iraq is refined in California.  Much of California's oil comes from across the state, Alaska and Canada. 

Oil also comes from Saudi Arabia, with 21 percent of imported Middle Eastern oil coming through the Straits of Hormuz.  Clearly any blockade of that area would have a worldwide impact.

Right now the biggest impact on California prices comes from local refineries.  A recent reported shutdown at the Shell refinery in Martinez is being blamed for higher wholesale prices.  Any flaring or other production problem at a refinery usually hits wholesale prices within days. 

Langley said the recent price spike is more due to local refinery issues than revolts in Iraq.  But he admits a shutdown of supply in Iraq would hit California drivers hard.

"If the conflict in Iraq is long term, we could see prices climb back above record levels for the year later in July," said Langley.

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