Business & Economy

LA gas prices just had their biggest weekly spike in history

The average price of gasoline in Los Angeles has shot up 74 cents a gallon over the past week, which AAA says is the largest weekly increase on record, going back to the year 2000.
The average price of gasoline in Los Angeles has shot up 74 cents a gallon over the past week, which AAA says is the largest weekly increase on record, going back to the year 2000.
Julio Cortez/AP

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The average price of gasoline in Los Angeles has shot up 74 cents a gallon over the past week, the largest weekly increase since 2000, the earliest records are available, according to AAA.

That's substantially more than the statewide increase of 43 cents per gallon, which is not a record, according to AAA.

Ever since a refinery explosion in Torrance in February, Southern California has been more reliant on imported gasoline, which is typically shipped via tanker.

“There’s been a steady and elevated flow of imports to the region – about three to four times higher than the normal volume – and then last week that number went to zero," Hannah Bruel, an industry economist at the U.S. Energy Information Administration, said on Monday.

The sudden drop wasn’t the result of an accident or a delay, according to Jeffery Spring, a spokesman for AAA.

"[Suppliers] were intending to sell their product here, but our prices dropped to a point where they could get a better price in Mexico," said Spring. "They made a hard right turn to Mexico and sold the product there.”

Rerouting ships to get a better price is not unusual, according to Philip Verleger, owner and president of PKVerleger LLC, an independent consulting firm. Oil is a commodity, and traders want to sell to the highest bidder. 

“Most likely these are traders in Switzerland, London or Singapore," said Verleger. "People move fuels around to maximize their profits.”

Consumers don’t usually notice when a tanker is diverted because supplies aren’t usually so tight.

Three or four tankers arriving at Los Angeles ports — depending on the size — could replenish the area's supplies, Verleger said.

Allison Mac, a petroleum analyst at Gas Buddy, said that should happen soon, which would bring relief to drivers.

"A couple of cargoes are supposed to arrive around the end of July," Mac said.