Recent Fuel Price Trends, Market Overview & Contributing ......Snapshot - Retail Prices Declining in CA Prices updated as of 6/29/2015 3:45am ... – Geopolitical events that increase

Recent Fuel Price Trends, Market Overview & Contributing Factors

Petroleum Market Advisory Committee Meeting Energy Institute at Haas

Berkeley, California June 30, 2015

Gordon Schremp Energy Assessments Division

California Energy Commission [email protected]

Presentation Overview

6/30/2015 2

• Purpose o Provide an overview of recent fuel price trends o Discuss factors contributing to elevated prices

• Current snapshot of fuel prices • California fuel prices usually more expensive

o Differences and level of taxation • Recent trends for gasoline prices • West Coast market comparison • Review of factors contributing to elevated prices

o Refinery operations o Inventory levels o Imports and exports

• Fuels-Under-the-Cap tracking • Closing remarks

Prices updated as of 6/29/2015 3:45amRegular Mid Premium Diesel

Current Avg. $3.194 $3.323 $3.443 $3.226 Yesterday Avg. $3.194 $3.327 $3.444 $3.228 Week Ago Avg. $3.175 $3.296 $3.413 $3.216 Month Ago Avg. $3.058 $3.180 $3.286 $3.172

Year Ago Avg. $4.005 $4.121 $4.226 $4.090



Year Ago Avg. $3.678 $3.862 $4.031 $3.905

• CA retail gasoline prices are slowly dropping

• California – Down 27.3 cpg since last

month and down 3.8 cpg since last week

– 68.1 cpg lower than same time last year

• Washington – Up 13.6 cpg since last

month and up 1.9 cpg since last week

– 81.1 cpg lower than same time last year

6/30/2015 3

Washington Average Prices

California Average Prices

National Average Prices

Snapshot - Retail Prices Declining in CA



Year Ago Avg. $4.130 $4.234 $4.332 $4.171

California Gasoline Market – More Expensive

6/30/2015 4

• California has one of the more expensive retail gasoline and diesel fuel prices in the United States

• Reasons why California retail prices are more expensive: – Greater tax burden – 17 cents – Higher production costs – 10 cents – Fuels-under-the-cap obligation costs – 10 cents – An isolated market – 10 cents and more

• Between 2001 and 2014, annual average prices at least: • 17 cents per gallon higher than the average all U.S. retail gasoline prices • 10 cents higher than the average all U.S. reformulated gasoline prices • 12 cents higher than the average all U.S. retail diesel prices

• Between 2009 and 2014, differentials have averaged • 35.2 cents per gallon higher for all types of gasoline • 24.4 cents higher for all reformulated gasoline • 19.9 cents higher for diesel fuel

21.1

16.9

27.0 26.8

20.2

23.728.1

26.7

32.5 30.9 29.5

41.638.1 38.7

72.9

0

10

20

30

40

50

60

70

80

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Y-T-D2015

Cent

s Per

Gal

lon

Retail Gasoline Price DifferencesCalifornia Less U.S. Average

Sources: California Energy Commission analysis of Energy Information Administration data.

Regular grade gasoline

Y-T-D data through June 22, 2015

6/30/2015 5

13.310.5

17.618.3

13.715.5

21.919.9

24.522.7

20.1

27.725.1 26.3

52.1

0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Y-T-D2015

Cent

s Per

Gal

lon

Retail Gasoline Price DifferencesCalif. Less U.S. Reformulated Average


Reformulated gasoline


6/30/2015 6

14.316.9

14.7

29.0

20.621.7

20.9

12.214.0

16.6

24.426.2

20.4

18.0

29.2

0

5

10

15

20

25

30

35

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Y-T-D2015

Cent

s Per

Gal

lon

Retail Diesel Fuel Price DifferencesCalifornia Less U.S. Average



6/30/2015 7

California Gasoline Market - Taxes

6/30/2015 8

• The amount of tax levied on a gallon of gasoline in California is usually higher than nearly every other state

• As of April 1, 2015, California retail gasoline taxes accounted for 66.0 cents per gallon

• The U.S. average was 48.8 cents per gallon so California’s retail gasoline tax burden was 17.2 cents per gallon higher than the U.S. average on that date

Source: American Petroleum Institute

California Diesel Fuel Market - Taxes

6/30/2015 9

• The amount of tax levied on a gallon of diesel fuel in California is usually higher than most other states

• As of April 1, 2015, California retail diesel fuel taxes accounted for 61.9 cents per gallon

• The U.S. average was 54.1 cents per gallon so California’s retail gasoline tax burden was 7.8 cents per gallon higher than the U.S. average on that date

Source: American Petroleum Institute

262.8

344.9

223.6

245.2

141.6

100

150

200

250

300

350

400

45012

/31/

2014

1/7/

2015

1/14

/201

5

1/21

/201

5

1/28

/201

5

2/4/

2015

2/11

/201

5

2/18

/201

5

2/25

/201

5

3/4/

2015

3/11

/201

5

3/18

/201

5

3/25

/201

5

4/1/

2015

4/8/

2015

4/15

/201

5

4/22

/201

5

4/29

/201

5

5/6/

2015

5/13

/201

5

5/20

/201

5

5/27

/201

5

6/3/

2015

6/10

/201

5

6/17

/201

5

6/24

/201

5

Cent

s Per

Gal

lon

California Gasoline Price ChangesRetail, Rack and Refinery Wholesale

California Regular Grade Retail GasolineRefinery Wholesale - CA AverageRack Wholesale - Los AngelesCrude Oil

Source: CEC analysis of AAA and OPIS prices.

Explosion occurs at Exxon Mobil refinery - February 18.

Refinery wholesale peaked May 11Rack wholesale peaked May 14Retail peaked May 17

6/30/2015 10

129.2 129.0 120.6 121.3146.9 145.0

32.362.4

117.889.2

134.7

100.110.2

10.0

10.0

10.1

10.244.2

16.0

31.5

42.5

24.5

26.0

268.0280.2

343.9326.7

381.0

345.3

0

50

100

150

200

250

300

350

400

450

12/29/2014 2/17/2015 3/9/2015 3/23/2015 5/14/2015 6/27/2015

Cent

s Per

Gal

lon

Distribution, Dealer Costs & Profits

Federal Excise Tax

State Excise Tax

Fuels Under the Cap Obligation

State & Local Taxes

UST Fee

Refiner Costs & Profits

Crude Oil Cost

Retail Price

Sources: California Energy Commission analysis of OPIS, EIA, and AAA data.

California Retail Gasoline Components

6/30/2015 11

50.0%

78.7%

25.1%

7.6%15.9%6.4%

8.4% 6.8%

0%

20%

40%

60%

80%

100%

120%19

94

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

U.S. Gasoline Sales Breakdown

Rack DTWCompany Outlets BulkOther

Source: California Energy Commission analysis of Energy Information Administration data.

6/30/2015 12

Dominated by distribution rack sales.

21.1%

42.5%

54.0%

42.2%

16.5%11.5%

8.1% 3.8%

0%

20%

40%

60%

80%

100%

120%19

94

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

California Gasoline Sales Breakdown

Rack DTWCompany Outlets BulkOther

Source: California Energy Commission analysis of Energy Information Administration data.

6/30/2015 13

Dealer Tank Wagon similar to distribution rack sales volume.

Western States More Isolated than Rest of U.S.

6/30/2015 14

West Coast petroleum product supply map

Seattle Num CO!JKI<."" SIO. N ... C'~I_)

Ports of SellltWTtICIXIlS .. , sPOkane , -. E'~"'" m.~ .. , ,_. ~. 2!il,OOO

FromPADD4 , lo __ ' T""....,. 10\1,500 .. .. "" .... 00 . .... 139,000 (Barge) • ,_. ..... 1(14,500

• - ~- ~

Vancouver (WA) , ~~ ..... 1$,000

Portland • W'><IO,T"-'<I SO'.<tn GIlle .~

• ~ .. W""'~I"""') •. m

" .. ~ -~ .~

" Sa<1_.ll:eIo1"11 _..., 15,000

Product Supply - PADD 5 Eugene " -~. Salt. MOo'. .~

(West Coes t) From PADD 4 " - -~ ~~

" -. .. - 2. S,21! • = Bulk Terminal " ,_.

~ 1('(1,000

'" " -, ~ 156,000 = Refin ing center " ~ .. ~u 132,000

0 = Refinery " -~. "- ,.", " ~ F .. """," m.~

- = Product Pipeline " - -- ' . 5,000

" ,_. -- 120,000

- = Product Flows , -~. F ...... ," 101,000 .. " 1JS000&R<I'no>g Toc"",. 00,7(1(1

• = Urban Areas " r.......,.,ReIo1"11 " ,~

San Francisco

.~ 1$.''' ' ','' Bakersfield

'0,11 . 11

e"lal Commission

California Gasoline Market - Isolated

6/30/2015 15

• California’s gasoline market is nearly self-sufficient, so supplies of gasoline from outside of California are not routinely needed to balance out supply with demand – Imports of gasoline and blending components account for only 3 to 6 percent

of supply

• The California market is geographically isolated from other locations in the United States that produce refined products

• Pipelines connect California refining centers to distribution terminals in Nevada and Arizona, but these pipelines only operate in one direction – sending gasoline and other transportation fuels to these neighboring states

• California market is isolated by time and distance from alternative sources of re-supply during unplanned refinery outages

Balance of Other Regions Varies • Unlike other areas, California is nearly self-sufficient

• Primary sources of transportation fuels originate from inside the state • More susceptible to price spikes following unplanned outages

• Other regions less prone to price spikes • Price spikes following significant unplanned refinery outages less common

6/30/2015 16

Large net exporting region Large net importing region

Factors Impacting Fuel Prices

• Transportation fuel prices are primarily impacted by: – Changes in crude oil price – Changes in wholesale price

• Crude oil is a global commodity & prices fluctuate due to: – Increasing supply from non-OPEC countries, such as the United States – Geopolitical events that increase risk of supply disruption – Rising or falling global demand for oil – Heightened activity in the futures market as an alternative investment

opportunity – Value of U.S. dollar to other currencies, a stronger dollar will place

downward pressure on global crude oil prices

6/30/2015 17

Factors Impacting Fuel Prices (cont) • Wholesale fuel prices impacted by:

↑ Unplanned refinery outages ↑ Return-to-service delays by refineries undergoing planned maintenance ↑ Transition from winter to summer gasoline recipe that decreases

gasoline production capability of refineries ↑ Introduction of new environmental fees ↑ Changes in fuel regulations, such as reformulated gasoline and

transition away from MTBE ↕ Changes in futures contract prices linked to wholesale prices ↕ Unusually high or low fluctuations of fuel inventory levels ↕ Changes in the level of taxes on fuels ↓ Transition from summer to winter gasoline recipe that increases

gasoline production capability of refineries ↓ Resumption of operations by temporarily idled refineries

6/30/2015 18

2015 Elevated Gasoline Prices - Factors

6/30/2015 19

Transition from Winter to Summer Gasoline

Transition from Summer to Winter Gasoline

Unplanned Refinery ClosureRefiner Delayed from Returning from Planned MaintenanceLower-than-normal Inventories Higher-than-normal InventoriesNew Environmental Fee Marine Imports of FuelIncreased Fuel Tax Decreased Fuel TaxChange in Fuel Regulations

Upward Pressure on Prices Downward Pressure on Prices

Factors Related to Seasonal Rise

• California gasoline prices normally increase at the start of each year due to a number of factors: – Demand for gasoline is usually at the low point during January and

steadily increases up through the summer months – Transition from winter to summer gasoline decreases gasoline

production capability of refineries by 5 to 8 percent • This change begins during the second week of February for Southern California and

a month later for Northern California

– Planned refinery maintenance work that takes longer than anticipated, delaying resumption of fuel production and decreasing inventories

– All of these factors place upward pressure on gasoline prices – Declining crude oil prices, however, can mask the normal rise in retail

gasoline prices

6/30/2015 20

200

250

300

350

400

450

500

1/3/

11

3/3/

11

5/3/

11

7/3/

11

9/3/

11

11/3

/11

1/3/

12

3/3/

12

5/3/

12

7/3/

12

9/3/

12

11/3

/12

1/3/

13

3/3/

13

5/3/

13

7/3/

13

9/3/

13

11/3

/13

1/3/

14

3/3/

14

5/3/

14

7/3/

14

9/3/

14

11/3

/14

1/3/

15

3/3/

15

Cent

s Per

Gal

lon

+ 95 Cents17 weeks

+ 74 Cents10 weeks + 66 Cents

9 weeks+ 60 Cents17 weeks

+ 76 Cents10 weeks

Source: California Energy Commission analysis of EIA data.

6/30/2015 21

Seasonal Gasoline Price Increase

California retail gasoline prices have increased at the start of each year since 2011 by a minimum of 60 cents per gallon.

Strike Prevents Refinery Restart – Feb. 1st

6/30/2015 22

• Tesoro Golden Eagle refinery in Martinez, CA given strike notice – Feb. 1

• Refinery was conducting planned maintenance on half of process units

• Company announces decision to idle remaining process units rather than attempt to restart idle units – Feb. 2

• Tesoro announces that all refinery units have been safely idled and the facility will be operated as a terminal – Feb. 6

– 9.3 percent of state refining capacity

• National refinery worker strike reaches a new four-year agreement – March 12

• Tesoro workers return to work and begin maintenance & restart operations – March 27

Source: Susan Tripp Pollard/Bay Area News Group.

Exxon Mobil Refinery Explosion – Feb. 18th

6/30/2015 23

• Explosion occurs at Exxon Mobil refinery in the morning

• Involves electrostatic precipitator (ESP), pollution control device

• Refinery gasoline units unable to operate following ESP outage

– 8.3 percent of state refining capacity

• According to company, supplies nearly 10 percent of gasoline to the state

• Trade publication reports refinery could resume operation of gasoline units, at reduced rates, using older ESP unit after being refurbished – possibly late July

• This action will benefit supply

Source: Bob Riha, Reuters.

Refinery Operations

6/30/2015 24

• Other refinery problems: • BP – Cherry Point begins planned maintenance – April 13

• May 31 – restart commences – delayed by 19 days

• US Refining – Tacoma begins unplanned maintenance – May 7 • Crude unit fire forces planned work moved up by 3-4 weeks • June 17 - work completed, restart operations commence

• Phillips 66 – Wilmington begins planned maintenance – May 13 • Work commenced 3 weeks earlier than scheduled due to cooling tower issues • June 9 - restart operations – delayed by 5 to 7 days

• Plains All American crude oil pipeline leak – May 20 • Phillips 66 operations impacted, accelerated planned maintenance & reduced

operations

• Chevron – El Segundo refinery maintenance continues • Previously scheduled completion on June 19 – delayed by 17 days

Refinery Operations

6/30/2015 25

• Refinery problems – gasoline impact quantified • West coast gasoline production capability significantly degraded • Based on analysis of IIR data, the quantity of gasoline production

capacity off-line during the last 4 months averaged nearly 130 thousand barrels per day (TBD) greater than 2014 o March – 75 TBD more, April 180 TBD more, May 175 TBD more &

June 85 TBD more than previous year

Source: Industrial Information Resources (IIR) Loss Gasoline Production Report.

6/30/2015 26

Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data.

California Gasoline Production Current vs. 5-year High-Low Band

California gasoline production continues through use of gasoline blendstock from refinery inventories.

Data through June 19, 2015 Exxon Mobil refinery outage

Tesoro Golden Eagle refinery strike

Tesoro begins restart process

Marine imports of gasoline start arriving

Gasoline Inventory Data

6/30/2015 27

• Inventory data for finished gasoline and blending components is tracked by the Energy Information Administration (EIA) and the California Energy Commission (CEC) • CEC publishes weekly refinery inventories • EIA publishes weekly & monthly data

o Refineries o Distribution terminals o Pipeline fill

• Distribution terminal and pipeline fill inventory levels are far less relevant compared to refinery inventory levels because of the absence of long-term storage capability

• “Days of Supply” calculations should be based on refinery inventory levels, not the incorrect inclusion of distribution terminal volumes

6/30/2015 28

Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data.

California Gasoline Inventory Levels Current vs. 5-year High-Low Band

California gasoline inventories were lower-than-normal for 1Q 2015 – scarcer stock levels can exacerbate price responses to refinery issues.

Data through June 19, 2015

Tesoro Golden Eagle refinery strike

Exxon Mobil refinery outage

Marine imports of gasoline start arriving

Tesoro begins restart process

10,000

11,000

12,000

13,000

14,000

15,000

16,000

Janu

ary 2

Janu

ary 9

Janu

ary 1

6Ja

nuar

y 23

Janu

ary 3

0Fe

brua

ry 6

Febr

uary

13

Febr

uary

20

Febr

uary

27

Mar

ch 6

Mar

ch 1

3M

arch

20

Mar

ch 2

7Ap

ril 3

April

10

April

17

April

24

May

1M

ay 8

May

15

May

22

May

29

June

5Ju

ne 1

2Ju

ne 1

9

Thou

sand

s of B

arre

ls2013 2014 2015

Source: California Energy Commission (CEC) - Weekly Fuels Watch Report.

11.9 percent higher than same-time-last-year.

California gasoline inventory levels were already lower-than-normal leading up to Tesoro - Golden Eagle refinery strike and the Exxon Mobil refinery outage. Influx of imports have enabled a recovery of inventory levels such that they are now nearly 12 percent higher than same-time-last-year.

California Gasoline Inventories

6/30/2015 29

7.9 8.0 8.0 7.9 7.8

2.8 2.6 2.3 2.1 1.8

5.5 5.4 5.6 5.6 5.6

21.222.5 22.4

20.721.3

11.712.8

12.2 11.9 12.1

9.8 10.0 10.4 10.1 9.7

13.8 13.7 13.7 13.412.7

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014

Days

of G

asol

ine

Supp

ly in

Inve

ntor

y United States PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 California

Sources: California Energy Commission analysis of Energy Information Administration and Petroleum Industry Information Reporting Act data.

"Days of Supply" for gasoline held at refineries is higher in California compared to most other areas of the United States with the exception of U.S. Gulf Coast region (PADD 3).

6/30/2015 30

Gasoline Inventory Levels “Days of Supply” Comparisons

0

20

40

60

80

100

120

140

160

180

2/27 3/6 3/13 3/20 3/27 4/3 4/10 4/17 4/24 5/1 5/8 5/15 5/22 5/29 6/5 6/12 6/19

Thou

sand

s of B

arre

ls Pe

r Day

2014 Total Gasoline Imports2015 Total Gasoline Imports

Source: California Energy Commission analysis of weekly import data from the Energy Information Administration.

3/27-6/19/15 averaged 82.4 thous. barrels per day (TBD)12.8 TBD same period during 2014Highest quantity since 2007

6/30/2015 31

West Coast Foreign Gasoline Imports

32.13

6.41

11.08

30.24

36.8638.46

21.21

23.34

0

5

10

15

20

25

30

35

40

45

January February March April

Thou

sand

s of B

arre

ls P

er D

ay 2014 2015

Source: California Energy Commission analysis of the International Trade Commission's Interactive Tariff and Trade DataWeb.

6/30/2015 32

California Foreign Gasoline Exports

• •

California Energy Commission

50.34

35.88

27.69

4.04

16.63

13.3915.43

16.45

0

10

20

30

40

50

60

January February March April

Thou

sand

s of B

arre

ls P

er D

ay 2014 2015

Source: California Energy Commission analysis of the International Trade Commission's Interactive Tariff and Trade DataWeb.

6/30/2015 33

Pacific Northwest Foreign Gasoline Exports

Fuels-Under-the-Cap (FUTC) Tracking

6/30/2015 34

• Fuels-Under-the-Cap regulation went into effect January 1, 2015 • The Oil Price Information Service (OPIS) calculates a value for the

FUTC obligation each business day, California Cap-at-the-Rack (CAR) • Assessment valuation uses price of carbon x carbon intensity of the

transportation fuel • Winter CARB reformulated gasoline with 10 percent ethanol • Summer CARB reformulated gasoline with 10 percent ethanol • CARB diesel fuel

• Majority of fuel providers have elected to use the daily OPIS CAR calculation for inclusion in their bills of lading at the distribution terminal • Either as a line item or embedded in the price

• Some marketers are calculating their own FUTC assessment and including in the overall price of the fuel

38.3

67.6

10.8

12.4

30.4

14.925.7

46.3

73.4

0

20

40

60

80

100

12012

/30/

2014

1/6/

2015

1/13

/201

5

1/20

/201

5

1/27

/201

5

2/3/

2015

2/10

/201

5

2/17

/201

5

2/24

/201

5

3/3/

2015

3/10

/201

5

3/17

/201

5

3/24

/201

5

3/31

/201

5

4/7/

2015

4/14

/201

5

4/21

/201

5

4/28

/201

5

5/5/

2015

5/12

/201

5

5/19

/201

5

5/26

/201

5

6/2/

2015

6/9/

2015

6/16

/201

5

6/23

/201

5

Cent

s Per

Gal

lon

Retail Gasoline Price DifferencesCalifornia vs. United States and Selected States

California Less United States California Less WashingtonCalifornia Less Oregon California Less NevadaCalifornia Less ArizonaSource: CEC analysis of AAA prices.

California retail gasoline price premium to U.S. has increased 29.3 cpg between 12/31/14 and 6/29/15.Premium to WA has increased 14.7 cpg.Premium to OR has increased 18.0 cpg.Premium to NV has increased 10.8 cpg.Premium to AZ has increased 27.1 cpg.

OPIS FUTC assessment for gasoline has averaged 10.1 cpg thru 6/26/15.

6/30/2015 35

-8.3

25.3

-9.0

21.3

-11.0

29.0

-40

-20

0

20

40

60

80

10012

/30/

2014

1/6/

2015

1/13

/201

5

1/20

/201

5

1/27

/201

5

2/3/

2015

2/10

/201

5

2/17

/201

5

2/24

/201

5

3/3/

2015

3/10

/201

5

3/17

/201

5

3/24

/201

5

3/31

/201

5

4/7/

2015

4/14

/201

5

4/21

/201

5

4/28

/201

5

5/5/

2015

5/12

/201

5

5/19

/201

5

5/26

/201

5

6/2/

2015

6/9/

2015

6/16

/201

5

6/23

/201

5

Cent

s Per

Gal

lon

Gasoline Refinery Spot Price BasisCalifornia vs. Pacific Northwest

California CARBOB Los Angeles Basis

California CARBOB Bay Area Basis

PNW Sub-octane Basis

Source: Oil Price Information Service

California average refinery spot price premium to PNW has decreased 8.1 cpg between 12/31/14 and 6/29/15. This indicates the PNW gasoline market has now become tighter compared to the California market.

Refinery wholesale gasoline prices continue to rebound on extended refinery work.

6/30/2015 36

8.3

34.2

3.1

-3.6

17.9

6.9

10.9

18.217.7

43.3

-10

0

10

20

30

40

50

6012

/30/

2014

1/6/

2015

1/13

/201

5

1/20

/201

5

1/27

/201

5

2/3/

2015

2/10

/201

5

2/17

/201

5

2/24

/201

5

3/3/

2015

3/10

/201

5

3/17

/201

5

3/24

/201

5

3/31

/201

5

4/7/

2015

4/14

/201

5

4/21

/201

5

4/28

/201

5

5/5/

2015

5/12

/201

5

5/19

/201

5

5/26

/201

5

6/2/

2015

6/9/

2015

6/16

/201

5

6/23

/201

5

Cent

s Per

Gal

lon

Retail Diesel Fuel Price DifferencesCalifornia vs. United States and Selected States

California Less United States California Less WashingtonCalifornia Less Oregon California Less NevadaCalifornia Less Arizona

Source: CEC analysis of AAA prices.

California retail diesel fuel price premium to U.S. has increased 25.9 cpg between 12/31/14 and 6/29/15.Premium to WA has decreased 6.7 cpg.Premium to OR has decreased 11.0 cpg.Premium to NV has increased 7.3 cpg.Premium to AZ has increased 25.6 cpg.

OPIS FUTC assessment for diesel fuel has averaged 12.9 cpg thru 6/26/15.

6/30/2015 37

-7.5

3.8

-8.0

0.3

-12.5

29.5

-30

-20

-10

0

10

20

30

4012

/30/

2014

1/6/

2015

1/13

/201

5

1/20

/201

5

1/27

/201

5

2/3/

2015

2/10

/201

5

2/17

/201

5

2/24

/201

5

3/3/

2015

3/10

/201

5

3/17

/201

5

3/24

/201

5

3/31

/201

5

4/7/

2015

4/14

/201

5

4/21

/201

5

4/28

/201

5

5/5/

2015

5/12

/201

5

5/19

/201

5

5/26

/201

5

6/2/

2015

6/9/

2015

6/16

/201

5

6/23

/201

5

Cent

s Per

Gal

lon

Diesel Fuel Refinery Spot Price BasisCalifornia vs. Pacific Northwest

California CARB ULSD Los Angeles Basis

California CARB ULSD Bay Area Basis

PNW EPA ULSD Basis

Source: Oil Price Information Service

California average refinery spot price premium to PNW has decreased 32.2 cpg between 12/31/14 and 6/29/15. This indicates the PNW diesel fuel market has become tighter compared to the California market.

Extended planned maintenance at BP Cherry Point, a fire at US Refining's Tacoma refinery, and an unplanned outage at Shell's Anacortes refinery have contributed to tighter diesel supplies in the Pacific Northwest.

6/30/2015 38

Retail Fuel Price Tracking Observations

6/30/2015 39

• Gasoline • From December 31, 2014 to June 29, 2015 the gap between the California retail

gasoline price and other Western states increased between 10.8 and 27.1 cents per gallon

• The calculated FUTC assessment by OPIS has averaged 10.1 cents per gallon over the same period and lies below the range of increased retail price differential

• Even greater differentials are attributed to increased tightness in the California gasoline market caused by refinery issues - crude oil prices have also rebounded and stabilized but are not a contributing factor to the retail price differential

• Diesel Fuel • From December 31, 2014 to June 29, 2015 the gap between the California retail

diesel fuel price and other Western states has ranged between a decrease of 11.0 and an increase of 25.6 cents per gallon

• The calculated FUTC assessment by OPIS has averaged 12.9 cents per gallon over the same period and lies within the range of increased retail price differential

Closing Remarks

• Refinery problems have been significant and sustained during 2015 • These issues have occurred with a backdrop of lower-than normal

inventory levels • Strong price spikes at refinery wholesale level quickly transferred

through to distribution terminals and retail • Very high West Coast gasoline prices attracted imports of gasoline

in quantities not seen since 2007 • However, exports of gasoline from California were similar to

previous year during March and April • Sustained higher-than-normal gasoline prices understandable in

light of the severe scale of refinery problems • Return to more normal gasoline pricing levels will likely be delayed

until Exxon Mobil resumes gasoline production from their Torrance refinery 6/30/2015 40

Questions?

6/30/2015 41

Sather Gate at U.C. Berkeley, source: berzerkeley.wordpress.com

ENERGY COMMISSION

California Energy Commission

Documents

Recent Fuel Price Trends, Market Overview & Contributing ......Snapshot - Retail Prices Declining in CA Prices updated as of 6/29/2015 3:45am ... – Geopolitical events that increase