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Gas prices in California have reached the highest since the beginning of the year at $5.26 per gallon last week, as the region braced for the impact of a rare tropical storm, Hilary, which left roads in the southern area of the state flooded with rainwater and mud.
As of August 24, the price of gas in the Golden State was still at $5.260 per gallon on average, according to the American Automobile Association (AAA)—higher than what was reported a week ago at $5.182 and a month ago at $4.891. Only a year ago, as the United States struggled with soaring inflation, average gas prices were higher in California, at $5.308 per gallon.
California gas prices are also much higher than the national average of $3.837 reported on August 24 by AAA. Last week, the U.S. Energy Information Administration (EIA) reported that the national average has reached $3.962 as of August 13—the highest price since October last year. As of August 21, the national average has reached $3.984.
The impact of Tropical Storm Hilary, which made landfall in Mexico's Baja peninsula before moving up towards Southern California, had raised concerns over oil refineries in the state, with experts concerned that any damage or temporary halt to the operations could lead to higher prices.
According to Denton Cinquegrana, chief oil analyst at Oil Price Information Service (OPIS), Hilary had nothing to do with rising gas prices in California.
"In fact the refineries in the L.A. area, roughly 1.1 million barrels per day operated during the storm," Cinquegrana told Newsweek. "There was one refinery with some issues, but that was pre-Hillary."
Gas in California is generally more expensive than in other states across the country, partly because of regulations that heavily tax the fuel in an effort to reduce carbon emissions and partly because the gas made in the Golden State, which is cleaner than other blends, is more expensive to produce.
The national average gas price had already reached a nine-month high in early August as a consequence of heat-related outages at refineries across the country, high demand, and lingering low supply.
Cinquegrana said that "crude oil and gasoline prices in conjunction recently reached the highest levels of the year in the wholesale markets," adding that that's "what's largely behind the recent move in California and the U.S. in general."
The average U.S. gas price, said Cinquegrana, is now very close to what it was at this time last year. But the expert doesn't think this is a sign of a looming crisis.
"It looks like prices have peaked in the wholesale and crude oil markets for the time being," Cinquegrana said. "Also, it looks like California prices are starting to trickle lower."
The return of the heat and the hurricane season might decide what's going to happen to gas prices in the coming months, according to the latest AAA update.
"While fewer drivers are fueling up at the moment, these looming weather concerns are a roadblock to falling pump prices," said AAA spokesperson Andrew Gross in a press release. "Gas Prices may keep waffling until mid-September or longer."
About the writer
Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property ... Read more