UPDATE 2-California gasoline prices ebb at last after record run

* Prices ease, but another refinery glitch threatens

* Congressman Waxman urges FTC to probe price rise

* State senate to hold hearing on refineries, gas prices

(Adds California state senate hearing, SAN FRANCISCO dateline)

SAN FRANCISCO, Oct 10 (Reuters) - Record-high retail pricesfor gasoline in California began to ease on Wednesday, recedingfrom an unprecedented jump to $5 a gallon in some areas, even asfurther refinery disruptions threatened to slow the decline.

More politicians weighed in with calls for regulatoryscrutiny of the price spike, which began just over a week ago,while a state senator announced a legislative committee hearingon the matter to be held in San Francisco next month.

The average price of a gallon of regular gasoline in thestate dipped by a half cent to $4.666, according to the AAA FuelGauge website, easing from Tuesday's record. Gas Buddy, afilling station tracker that updates regularly, also showedstate prices down half a penny, at just below $4.65 per gallon.

While wholesale prices started falling last Friday, it tooksome time for retail rates to follow. Prices are still up morethan 45 cents from a week ago, and the premium California'smotorists pay versus the U.S. average remains unusually wide atabout 86 cents.

In Los Angeles, where shortages had been so acute that ahandful of service stations stopped selling fuel, average pricesremained above $4.90 a gallon.

Prices surged more than 50 cents a gallon last week andwholesale premiums rose nearly a dollar after various refinerymishaps pinched supplies. Market sources said a possible "shortsqueeze" that came about when one refiner was forced to buy fuelon the spot market may also have been a factor.

The spike prompted Henry Waxman, ranking member of the Houseof Representatives' Energy and Commerce Committee, to ask theFederal Trade Commission to investigate the causes. In a letterto FTC Chairman Jon Leibowitz on Tuesday, Waxman said the commonexplanation was shortages resulting from refinery shutdowns.


But Waxman said periods of tight gasoline supplies requirevigilance because of opportunities for market manipulation,especially when only a few players hold most of the marketshare. "When Los Angeles consumers see their gasoline pricesskyrocket by 50 cents per gallon over the course of one week,something is wrong," Waxman said in the letter.

The price jump, the biggest in any single state since 2005'sHurricane Katrina, AAA said, unnerved drivers in the car-lovingstate and led its two U.S. senators also to call for federalprobes of possible manipulation in the gasoline trading markets.

Average Californian households burn about 100 gallons (378liters) of gasoline a month at a cost of $466 at Wednesday'sprices, said AAA, an automobile club.

The price spike eased after California Governor Jerry Brownon Sunday ordered that service stations be allowed to beginstocking "winter-blend" fuel three weeks ahead of schedule.

Refiners responded by switching over this week. KinderMorgan said it would accept winter-blend gasoline forshipment immediately on its 3,000-mile (4,800-km) Pacificpipeline system, having originally scheduled that for Oct. 15.

Wholesale prices dropped by 60 cents a gallon on Monday, andanalysts said a sharp fall in retail prices would follow withinabout a week, barring further market disruptions.

But on Tuesday, wholesale prices in Los Angeles jumped by 26cents a gallon after Exxon Mobil Corp said it would moveahead with planned work on its local refinery for the rest ofOctober. A power failure at that plant in Torrance had tightenedsupplies and contributed to last week's price surge.

Meanwhile, Chevron Corp said a key unit at itsRichmond, California refinery, which suffered a major fire inAugust, would remain shut through the end of the year - the longend of estimates by industry sources.

In response, state senator Mark Leno said on Wednesday theSenate Select Committee on Bay Area Transportation would hold ahearing on state refineries and gasoline prices next month.

Leno said the Richmond closure could create problems for thestate beyond the pump. "Economists have estimated that a lengthyshutdown of that facility could slow the growth rate of thestate's economy by half a percentage point," he said.

The supply squeeze also led to a renewed call to block theproposed acquisition of a BP Plc refinery in southernCalifornia by Tesoro Corp , unveiled in August.

"If the purchase goes through, Tesoro and Chevron willbetween them own nearly half of California's fuel refiningcapacity, including the three largest refineries in the state,"wrote Liza Tucker, of Santa Monica, California-based ConsumerWatchdog, in an Oct. 10 letter to the state attorney general.

(Reporting by Braden Reddall in San Francisco, Jonathan Leff inNew York and Timothy Gardner in Washington; Editing by DaleHudson and Jeffrey Benkoe)

((jonathan.leff@thomsonreuters.com)(+1 646 223 6068)(ReutersMessaging: jonathan.leff.thomsonreuters.com@reuters.net))