California gas prices drop by half a penny

SUE MANNING, Associated Press

LOS ANGELES -- California gas prices dipped half a penny Wednesday, leaving experts split on where they will go next.

The average price of regular unleaded was just under $4.67 a gallon on Wednesday, down a half-cent from Tuesday but still the highest price in the nation, according to AAA's Daily Fuel Gauge Report.

Gas prices went up 50 cents a gallon between Oct. 1 and Oct. 8, from $4.168 to $4.668, the largest one-week price spike in California history, said AAA spokesman Avery Ash. The previous record was 26.2 cents a gallon in February.

The largest increase nationally was recorded following Hurricane Ike, when gas went up 56 cents a gallon.

Chevron announced Tuesday that the crude unit shut down by fire at its Northern California refinery would remain closed through the end of the year.

Some analysts see this as a sign that prices will remain high, others are more optimistic because California is switching from an environmentally friendly summer blend to a cheaper winter blend.

Chevron's first public admission about the closure confirmed what analysts already knew, and will not likely have any effect on gas prices, said Oil Price Information Services' Denton Cinquegrana.

Prices were going up before the fire. A one-day power outage at a Southern California plant and corrosion problems in a critical pipeline compounded the problems.

Cinquegrana thinks the early release of winter gas stocks will help push prices back down.

"I think the worst is in the rearview mirror right now and that between Halloween and Election Day California will be back to where we were before the spike," Cinquegrana said.

Ash said the loss of the refinery through the fourth quarter "confirmed that refining capacity in California will remain tight through the end of the year."

Chevron officials did not return calls for comment.

Several lawmakers have called for investigations and hearings to determine if supply and demand is the reason for the high prices or if fraud is involved.


Jason Dearen in San Francisco contributed to this report.