All else equal, changes in gasoline prices follow changes in crude prices. However, the ample supply of gasoline has tempered gasoline prices on the West Coast. As of August 22, spot prices for CARBOB in Los Angeles and San Francisco were both trading at 26-cent-per-gallon discounts to reformulated blendstock for oxygenate blending (RBOB) in New York Harbor. In June, before the recent drop in prices, CARBOB spot prices in Los Angeles and San Francisco traded at monthly-average premiums to New York RBOB of 22 and 16 cents per gallon, respectively. Given the lagged relationship between wholesale prices and retail prices, current wholesale price levels indicate that without further changes to the market, there could be additional decreases in West Coast gasoline prices.
Although the retail gasoline price in California has declined more than the U.S. national average price, it remains 25 cents per gallon above the U.S. average. Higher-than-average state excise taxes on gasoline and a higher cost to produce CARBOB, which has a lower Reid Vapor Pressure requirement than other U.S. gasoline blendstocks, cause California retail prices to be among the highest in the country. As of the beginning of 2013, state and federal excise taxes accounted for about 38 cents of the price of each gallon of gasoline sold in California, the most of any state in the country. In addition to these taxes, California levies a 2.25 percent sales tax on each gallon of gasoline sold, and some local California jurisdictions also impose taxes.
Gasoline Price Up Less Than a Penny; Diesel Fuel Up One Cent
The U.S. average retail price of regular gasoline increased less than one cent to remain at $3.55 per gallon as of August 26, 2013, 22 cents lower than last year at this time. Prices increased by two cents in the Midwest to $3.52 per gallon, and by one cent on the Gulf Coast to $3.38 per gallon, while decreasing in all other regions. The West Coast price is $3.75 per gallon, down three cents from last week. The Rocky Mountain price is lower by two cents at $3.62 per gallon. Rounding out the regions, the East Coast price is down less than a penny to remain at $3.55 per gallon.
The national average diesel fuel price increased one cent to $3.91 per gallon, 18 cents lower than last year at this time. Prices increased one cent in the East Coast, Gulf Coast, and Rocky Mountain regions, to $3.93 per gallon, $3.83 per gallon, and $3.93 per gallon, respectively. In the Midwest and West Coast regions, prices are $3.88 per gallon and $4.07 per gallon, respectively, up two cents from last week.