Gasoline prices across California are heading upward even as those in most of the rest of the country continue in freefall.
California’s gasoline problems apparently relate to mechanical and financial problems at two refineries.
On Dec. 22, Flying J Inc. and its Big West refining and Longhorn Pipeline subsidiaries filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Big West owns and operates the former Shell Oil refinery in Bakersfield.
It’s the state’s smallest refinery, based on gasoline output, according to the California Energy Commission.
But the threat to its comparatively small volume has been enough of an excuse to send prices up, as have worries over a mechanical problem at BP’s refinery in Carson.
Flying J says all of its operations – including the Bakersfield refinery -- remain open and are conducting business as usual.
The company says it faced near-term liquidity pressure from “an unprecedented combination of factors: the precipitous drop in the price of oil and the lack of available financing from its traditional sources due to disrupted credit markets.”
It says when it could not meet its liquidity needs, the company had no other choice than a Chapter 11 filing to provide the time to work through a solution.
Meanwhile the price of crude oil is still falling. Demand is dropping as the recession deepens and spreads, observers say.
Oil settled Wednesday on the New York Mercantile Exchange at $35.35 per barrel. That’s 75 percent below its peak this summer.
Here are Central Valley market averages on Dec. 26, driving from south to north, as reported by the American Automobile Association with last week’s (Dec. 19) averages in parentheses and [Dec. 12] prices in brackets:
