Report Details Inaccuracies in West Coast Gas Price Data

West Coast gasoline prices are primarily determined by the world price of oil. Inventory levels can also be significant, although with a smaller impact. Current production levels for both West Coast and California have no statistically significant impact on the price of gasoline.

The statistical results contradict frequently cited press and industry reports that trace price spikes to poorly documented outage events. A review of detailed refinery data from McCullough Research indicates that the accuracy of these reports may be in question. Specifically, an exhaustive review of California refinery emissions data reveals inconsistencies between when refineries were producing petroleum products and publicly reported maintenance shutdowns.

Gasoline inventory levels in California increased during the May price spike. Data through Nov. 2, 2012 shows a similar pattern in the October price spikes. The argument that the price spikes on the West Coast are caused by supply shortages is contradicted by the increasing gasoline inventories during the period of extraordinary prices. The increasing inventories during periods of apparent shortages are more consistent with withholding supply and market power than the fundamentals of gasoline production. Given the concentration of the West Coast gasoline market and its isolation, these factors can have a significant impact on prices borne by consumers at the pump.