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LOS ANGELES -- Gasoline station owners in the greater Los Angeles area have begun to shut off fuel pumps due to record high wholesale fuel prices in the area. According to Bloomberg, spot, or wholesale gasoline prices in the Los Angeles area have surged 70 cents per gallon this week alone to $1.15 a gallon vs. gasoline futures traded on the New York Mercantile Exchange.
The news source reports that's the highest wholesale fuel prices seen since at least November 2007, when Bloomberg began publishing those prices.
Overall, the average price of regular gasoline jumped to $3.9495 a gallon in southern California. Supply shortages are cited as the reason for record high California gasoline prices.
Costco Wholesale Corp. is one retailer that has begun shutting fuel pumps. Its outlet in Simi Valley, Calif., ran out of gasoline earlier this week and was selling premium fuel at the price of regular, Jeff Cole, Costco's vice president of gasoline, told the news outlet.
Costco is not alone. Low-P, a Calabasas, Calif., gas station stopping selling unleaded gasoline on Oct. 2 and ran out of high- and medium-octane fuel yesterday, the news source reported.
"I can get gas, but it's going to cost me $4.90 a gallon, and I can't sell it here for $5," John Ravi, Low-P's station owner, told Bloomberg. "If you come right now, I have some diesel left. That's all. My market is open, but no gas."
Sam Krikorian, owner of Quality Auto Repair in North Hollywood, Calif., held a similar sentiment. "We're going to start shutting pumps [tomorrow]," he told the news outlet. "Gas is costing me almost $4.75 a gallon with taxes. There's no sense in staying open. The profit margins are so low it's not worth it."
Supply shortages in California were likely caused by several factors, including the shutdown of a Chevron Corp. pipeline last month and an Oct. 1 power failure at ExxonMobil Corp.'s Torrance, Calif., refinery.
In response to record high wholesale fuel prices in the Golden State, the California Independent Oil Marketers Association, an independent group that represents wholesale and retail fuel marketers, asked the state yesterday to expedite a waiver that would allow refiners to produce and sell winter-grade fuel, Jay McKeeman, a spokesman for the association, told the news source.
"Everybody is concerned about what might happen," he relayed. "The real question is: How long is it going to last and what can the state do?"