California's gasoline prices were often in the news in 2015 and the trend will continue in 2016. Dave Hackett of Stillwater is one member of the California Energy Commission Petroleum Market Advisory Committee which continues to look into the gasoline prices in California. A topic of discussion at the last PMAC meeting was the February 2015 ExxonMobil Torrance Refinery Electrostatic Precipitator explosion, and subsequent (and ongoing) reduced gasoline production that has been a factor in the sustained higher than normal price difference between California and the rest of the U.S.

Based on recent occurrences in the market, we see the possibility that gasoline prices could again spike this Spring. As the chart below shows, the inventory of gasoline on the West Coast, much of which is in California, normally peaks in January and then declines. 2015 inventories began the year in typical fashion. However, after the Torrance refinery outage in February stocks fell precipitously. Gasoline was imported from all over the world to maintain inventory at about 28 million barrels (mb) which supports reliably meeting consumer demand. At the end of a typical year, gasoline inventories increase in November and December, peaking in January. However, this typical inventory build has not happened this winter.