Iran, Venezuela and a 'petro island' creates perfect storm for rising California gas prices

May 18, 2018

If you've been to the pump recently on the Central Coast, you've probably noticed higher-than-usual gas prices. For weeks, prices have been hovering around the $4.00/gallon mark, and now it's up to $4.29 for regular unleaded in Cambria. 

To get some insight into what's going on with gas prices in California, KCBX News’ Tyler Pratt spoke with Patrick DeHaan, a petroleum specialist with the fuel price app GasBuddy.

*Radio Transcript*

KCBX News: Patrick, gas prices continue to rise. What's going on?

PATRICK DEHAAN: Yeah, that's right. We've continued to see gas prices go up for too long, it seems, looks like gas prices have been on the rise for at least the last three months or so, tracing back all the way to Christmastime. That's brought the statewide average up to $3.69 - that's 65 cents higher than last year. And among the highest it's been since 2014, largely because oil prices are also at their highest level since 2014.

KCBX: And what are some of the reasons behind these hikes?

DEHAAN: Well, mainly it continues to be a story of declining oil supply. We can thank OPEC for cutting oil production back in 2017 for the decline in crude oil inventories. But we also are seeing Venezuela ship very low amounts of crude oil. Their exports are the lowest they've been in decades, as a result of the economic turmoil. And more recently, we're also dealing with a very slight impact so far from the Iran situation, with President Trump withdrawing from the nuclear deal. That could hold some more potential for price increases in the future, should U.S. partners and allies go along with U.S. sanctions, that would certainly cripple the flow of oil out of Iran and push prices up even more.

KCBX: I've got to tell you, as someone that moved here from New Orleans, Louisiana, I miss the days of thinking that $2.11 was expensive.

DEHAAN: Yeah, that's right. California is always the king when it comes to high gas prices, thanks to a special summer blend of gasoline, high gasoline taxes. and the West Coast as bit of a 'petro island,' if you will.

KCBX: What does that mean?

DEHAAN: Essentially, the West Coast is isolated from the rest of the country when it comes to gasoline supply. So it tends to lead to slightly higher prices.

KCBX: Well, what can some customers do as they head to the pumps?

DEHAAN: Well, certainly there's always a potential to shop around for the lowest price. In fact, a lot of motorists who we recently surveyed said they don't do that. But across the state, there is a wide variety of pricing. Even in one city alone, like L.A. for example, prices vary by over a dollar a gallon. So, I would say going to the pump and paying higher prices is never fun, but you can always offset the higher price by taking 10 seconds and shopping around for the lowest price.

KCBX: Is there any end in sight to these rising prices or they're just going to continue to get higher and higher?

DEHAAN: They may do that at least for the short term. Venezuela's situation continues to get more dire. So that could have a longer term impact on prices. In addition, the Iran sanctions situation could worsen as well. So, I don't know if it would get a whole lot worse. It certainly could depending on those two situations. But one thing is for sure, and that is that we will likely be paying the most at the pump that we have since 2014. Though, I don't expect record prices.

KCBX: I guess a lot more people might be motivated to take public transportation at this point.

DEHAAN: That's right. You'll probably start to see mass transit numbers rebound as a result of higher prices.

KCBX: Patrick Dehaan, with GasBuddy. Thank you so much.

DEHAAN: You're welcome. Tyler. Take care.