Bubble Map Update: Supply Disruptions Raise Prices in California

May 20, 2015 By

May 19, 2015


The May Bubble Map shows crude oil prices continuing on the upward trend from last month. WTI is up $7 since our last post, at $59 per barrel on May 18th. The WTI/Brent differential remains at $7 over WTI. The Alaska North Slope price also stays steady at $3 over WTI. Bakken continues to stay $12 under WTI. The Western Canadian Select differential has tightened to $9 under WTI due to heightened seasonal demand for heavy crude to make asphalt and as access to U.S. markets continues to improve.

Prices at the pump are rising as crude oil prices rise. California, as always, is leading the rising price wave. Currently the California average pump price per gallon is over a dollar more than the national average. We always say it, but it bears repeating that California is a “fuel island.” Supply to California is constrained by the physical distance from crude oil sources and by stringent and unique environmental standards for gasoline. If any supply disruption occurs in the California transportation fuels supply chain, prices will go up more rapidly than anywhere else in the country. Refined products supply started to be constrained and pump prices began to rise in February after the ExxonMobil Torrance refinery crude unit explosion. Since then, planned maintenance at Chevron’s El Segundo refinery and the Phillips 66 Wilmington refinery have further constrained supplies. Supply constraints will continue until the refinery turnarounds are completed. The high prices have attracted gasoline and jet fuel imports to California. Bloomberg is reporting that several cargo ships from Europe and Asia are headed to Southern California ports.

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