Market Chatter: California Gasoline Inventories at Lowest on Record, Likely to Dip More
California's gasoline inventories are at their lowest on record and analysts warn that the Middle East conflict's impact on the state's fuel supply is likely to become more severe in the coming weeks, Reuters reported Thursday.The state's gasoline prices have also risen sharply, to $5.86 per gallon versus a nationwide average of $4.09, the article said, citing the American Automobile Association. Californian price reflects a 26% increase since the start of the Iran war.Due to the fact that the state is not connected to US energy pipeline networks, it relies on refined product imports from Asia, leaving it particularly vulnerable given that Asia in turn is highly dependent on Middle Eastern countries for crude oil.California's Energy Commission said it is communicating regularly with the state's oil refineries to ensure adequate supplies of fuel, Reuters reported.Gasoline stocks in the state over the four weeks to April 10 averaged 9.44 million barrels, their lowest in the Energy Commission's data set which began in 2005.California generally has higher gasoline prices than the rest of the US due to taxes and also because of a unique gasoline blend that was developed to tackle smog that was once common over Los Angeles.An analysis by Michael Mische, professor at the University of Southern California, said that the worst impacts from reduced Middle Eastern crude outflows were yet to be felt in the state, Reuters said.He wrote that gasoline imports would fall sharply in the next two weeks and that this would soon begin to be noticed at the gas pump.California was once a major producer of crude oil but its reliance on importance has grown and its refining capacity has shrunk with the closure of two facilities.The Energy Commission said refineries in California were importing both crude and gasoline from alternative origins to the Middle East and said "We are not predicting a near-term supply challenge," Reuters reported.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)