The U.S. Energy Information Administration reports that last week the U.S. average price for regular gasoline dropped a penny to $2.74 per gallon, which is 89 cents higher than the average a year ago. The West Coast, comprised of Alaska, Arizona, California, Hawaii, Nevada, Oregon, and Washington saw the average move down more than a penny to $2.95 per gallon. The average in California also fell, slipping two cents to $3.03 per gallon.
     Diesel prices also declined somewhat, with the national average falling a penny to $2.87 per gallon, 57 cents above the price last year. On the West Coast, the average dropped about two cents to $2.95 per gallon. The average in California dipped two cents to $3.01 per gallon.
     Reuters news reported Tuesday that according to a company spokesman, Chevron Corp. plans to restructure its refinery operations, cutting some jobs and exiting some markets.
     U.S. refiners have been shutting down operations as the rising costs for crude oil squeeze margins and outpace increases in prices for refined products such as gasoline, heating oil, diesel fuel and jet fuel.
     In fact, experts report that refineries have cut production down to a little more than 78 percent of capacity and that we should expect more cuts over the next quarter.  This compares with an average refinery production pace of about 87 percent over the past 5 years.
     This month California went to a mandatory 10 percent blend of cleaner-burning ethanol in gasoline. Diesel is not affected.  Increased ethanol blending displaces gasoline, further eroding demand, even when drivers are purchasing the same amount of fuel. These factors would seem to be allowing not only crude, but the "street price" of fuel to drop. Indeed, domestic crude closed Friday at under $74.25 - back in the $70-$75 range - and financial experts are predicting a soft, or "bear" financial market in the near term due to better weather for the time of year and disaster attention shifting from oil-producers Iran and Russia to Haiti. So we might see some prices easing over the next two months before the usual seasonal increase by late March/early April.

Chris Nobles
Commercial Fueling
Nella Oil Company