Californians love their cars and few roads are as suited to a nice drive, especially in a convertible, as the Pacific Coast Highway. However, keeping those cars running is turning into a problem as California gas stations are running out of fuel.
Spike in gas prices causing California gas stations to run dry
Most often, when people talk about how expensive gas is, they’ve fallen for what economists call a money illusion. A money illusion occurs when people compare two amounts of money that aren’t really the same. For instance, the price of a new Corvette in, say, 1953, a few thousand dollars, seems way less expensive than a new Corvette today, about $50,000 for the base model. However, after 50 years of inflation, it isn’t the same amount of money, since $1 buys much less in 2012 than in 1953.
Just for the record, a new Corvette, according to Wikipedia, was $3,490 in 1953. Today that’s just over $30,000, using the Bureau of Labor Statistics inflation calculator.
Sometimes, high gas prices aren’t just a money illusion. Californians, according to AutoBlog, are on track for $5 per gallon gas. Where it’s available. California gas stations are getting rationed amounts to sell, due to a price spike.
Reports are emerging of a number of California gas stations, including some Costco gas stations, which are usually one of the cheapest ones to fill up at, running completely out of regular unleaded. At least one Costco had to resort to selling premium gasoline at regular unleaded prices. Granted, that’s great news for anyone driving a BMW or other car that requires it.
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The issue has to do with refineries in that state. Supply disruptions, according to Businessweek, led to refineries to stop selling gasoline wholesale to gas stations. Normally, gas stations just order a shipment and they get it. However, in California, refineries have resorted to gas rationing.
Part of it, according to NBC News, has to do with a number of refineries retooling to produce winter blends of gasoline, meaning the supply on hand is all that’s available. There was also a power outage at an Exxon refinery in Torrance, Calif., and a Chevron crude oil distillation facility in Richmond also has been shutdown for maintenance. A Bay Area pipeline has also been shut down for the past few weeks.
The 1970s all over again
It’s reminiscent of the 1970s, when an OPEC oil embargo forced gas stations to ration gas to customers, which led to the death of muscle cars and for Toyota dealers, Bellevue, Wa., to San Diego and LA to New York, selling a lot more cars. Worst of all, people were allowed to wear bell bottoms and listen to disco.
Though California gas stations rationing gasoline out is certainly not expected, a spike in gas prices before the end of the year is a fact of life. People are going to travel for Thanksgiving and Christmas, meaning charging more boosts profits.
BLS inflation calculator: http://www.bls.gov/data/inflation_calculator.htm