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Northern CA Gas Prices Are on the Rise, But No Need to Panic

February 18, 2015

Northern CA Gas Prices Are on the Rise, But No Need to Panic

In Northern California, the cost of a gallon of gas has risen by $0.07 in the past month, according to the Northern California AAA. Labor strikes and refinery maintenance have been cited as key causes behind the increase, but experts in the energy industry predict that gas prices will remain relatively low over the long run.

Statewide, the average price for gas is $2.65 per gallon, as opposed to $2.62 per gallon in Northern California and $2.67 per gallon in the Bay Area. Gas prices in Northern California range from $2.46 per gallon in Marysville to $2.78 in Eureka. In the Bay Area, prices range from $2.56 to $2.75 per gallon.

California’s $2.65 per gallon average is the highest in the contiguous states, but isn’t the highest per gallon cost in the US. That honor belongs to Hawaii at over $3.00 per gallon. The national average is currently $2.19 per gallon, which represents a $0.04 increase from a month ago.

According to Allison Mac, an analyst with GasBuddy.com, gas prices are on the upswing in California due to the high cost of living in the state.  

“California and the Pacific Northwest now have the highest wholesale prices in the nation, so some of the largest increases are expected in California,” said Mac.

Several factors come into play when accounting for rising gas prices across the nation and in California in particular. One of these factors is that local refineries ramp down production early in the year in order to better prepare for increased gas demand during the summer.

Another factor is labor unrest: with about 5,200 members of the United Steelworkers union having recently gone on strike, oil refinery production will be affected. The affected refineries and chemical plants produce over 10% of US petroleum products.

Above all, market inertia may also play a significant role. Until January 25, average US gas prices fell for 123 consecutive days. Therefore, it’s reasonable to assume that the pendulum was bound to swing back the other way eventually.

With that said, long-term prospects remain relatively optimistic due to worldwide excess of oil, including in the United States. According to experts, gas will cost approximately $60 to $70 a barrel in the next few years, which would represent a 50% reduction over previous years.

“There still is a lot of crude oil, and equally important world demand is still relatively weak,” said Tom Robinson of San Jose-based Coast Oil. “The price of crude oil, may go up because it went so low, but it is unlikely to go up significantly in the near term.”

While you can expect to pay a bit more at the pump this summer, you can still find a great deal at Elk Grove Ford! Stop by our dealership for our extensive new and pre-owned vehicle inventory. For years we've serviced Northern California customers with Ford cars, trucks and SUVs, and we look forward to doing the same for you!