“The squeeze is on, and people are doing desperate things,” is how one independent described the situation in California. As Bloomberg reports, a shortage of supply along with drastically higher wholesale prices of gasoline has caused ‘mom-and-pop’ gas stations to close down as their margins are destroyed. Even larger firms, such as CostCo, are closing sites due to the shortages as Los Angeles and San Francisco gas prices jump 30-45c in a few days.
As one owner noted: “I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” and another added that “we’re going to start shutting pumps Friday, as 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.”
The problem is likely a short-term one according to some as the temporary shutdown of local refineries (after Chevron’s Richmond refinery fire) and maintenance is completed but it is clear that even a short-term blip in wholesale prices (whether driven by local supply or global geopolitics) causes pain as it would appear we are close to ‘inelastic’ levels of demand.
- *VALERO SAYS SUPPLY IN CALIFORNIA HAS TIGHTENED
- *VALERO SAYS IT HAS TEMPORARILY HALTED SPOT SALES IN CALIFORNIA
California gas has not fallen as the national average has…
Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. (COST) are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.
Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, said by telephone. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said.