Gasoline at the pump in California fell from a record as Valero Energy Corp. (VLO) began making a cheaper blend of fuel at refineries near San Francisco and Los Angeles. Regular gasoline at the pump slid to $4.666 a gallon today from the all-time peak of $4.671 a gallon, according to data from AAA, the nation’s largest motoring organization. Prices jumped 50 cents last week as refineries reduced output and Chevron Corp. (CVX) shut a pipeline because of contamination. The California Air Resources Board granted refineries permission on Oct. 7 to make gasoline with a higher vapor pressure, allowing them to produce more of the fuel by adding butane to the mix. “You can add more light gasoline blendstocks� and increase output by 2 percent to 5 percent under the rules, said Andy Lipow, president of Lipow Oil Associates LLC in Houston. Valero has started making the cheaper blend at its Benicia and Wilmington refineries, which have a combined capacity of 248,000 barrels a day, Bill Day, a San Antonio-based spokesman for the company, said by e-mail. Phillips 66 (PSX) will begin to produce the new blend in California “within a few days� of state and federal approval, Rich Johnson, a Houston-based company spokesman, said in an e- mail. The company operates refineries in Rodeo and Los Angeles with a combined capacity of 215,000 barrels a day. Wholesale Prices Wholesale gasoline prices rose for the first time in three days as Exxon Mobil Corp. (XOM)’s refinery in Torrance announced plans to flare gases through the end of the month. Prices for California-blend gasoline, or Carbob, on the spot market, climbed 28.06 cents to $3.5237 a gallon in Los Angeles, data compiled by Bloomberg show. The same 85.5 octane blend gained 28.06 cents to $3.4437 in San Francisco. Exxon’s plans to flare gases at its 150,000 barrel-a-day refinery near Los Angeles from today through Oct. 31 are not related to a breakdown, the company said in a notice to regulators. No impact to production is anticipated, Gesuina Paras, a Torrance-based spokeswoman for the refinery, said by e- mail. That plant resumed normal operations Oct. 5 after an Oct. 1 power failure that reduced output and spurred the run-up in gasoline prices. The power failure followed the shutdown of a Chevron pipeline that delivers crude to Northern California because of contamination. Fuel supplies were already restricted after an Aug. 6 fire that knocked out a crude-processing unit at Chevron’s plant in Richmond, near San Francisco, the third- largest in the state. It has been making transportation fuels at a reduced rate since the incident, the company said. The Richmond crude unit won’t resume production before the end of the year, Chevron said in a third-quarter interim update released last night. To contact the reporters on this story: Christine Harvey in New York at charvey32@bloomberg.net; Dan Murtaugh in Houston at dmurtaugh@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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