For the last several years, I have stated that we would know the price fixing schemes by the Central Planners were really blowing up once you started to see supply shortages. Well, we may be seeing the early stages of this in California.
I am well aware from my days as a refining analyst that California has its own specific specifications on fuel that make it a very isolated market, nonetheless this is something to pay close attention to, especially if we start to see it in other markets in the United States. From Bloomberg:
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.
The gasoline shortage “feels like a hurricane to me, but it’s the West Coast,” Cole said yesterday. “We’re obviously extremely disheartened that we are unable to do this, and we’re pulling fuel from all corners of California to fix this.”
Low-P, a gasoline station in Calabasas, California, 30 miles west of Los Angeles, stopped selling unleaded gasoline Oct. 2 and ran out of high-octane and medium-octane fuel yesterday, John Ravi, the station’s owner, said by phone yesterday. Ravi said he posted an “Out of Gasoline” sign on each pump and took down the prices outside his shop.
Full article here.
In Liberty,
Mike
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http://www.bloomberg.com/news/2012-10-03/california-gas-stations-begin-to-shut-on-record-high-spot-prices.html
Just the start…
(Nat West bank executive): It’s just a glitch.
demand distrution for gasoline starts at about 4.00 per gal. us no matter where you live. it is a consumer driven dynamic linked to cost of living. california may be an”isolated” market BUT is is also one of the largest on the planet with a diverse enuff econimy to qualify as a microcosm of the market nation wide.
what i see going on looks like the producers are caught in a pickel between there cost of production and demand destruction, wich won’t allow them to charge enuff to cover operations fully. thus stressing there equipment through 1) running at 100%+ of capicity ,2)maintaince cutbacks. this is resulting in breakdowns and accdents that then cause price spikes that result in further demand distruction in a progressive cycle.
the pattern is that of a large aircraft in a “stall” situation do to overloading at takeoff, trying to gain alttude or even stay in flight ………..not a situation that ends well on avrage.
Just got gas this morning at Costco, more than a hundred vehicles waiting, never seen anything like it. Person next to me said it reminded him of the seventies. I live about 40 miles east of downtown LA