San Diego’s average price for a gallon of regular gasoline has hit a low for 2022, continuing a decisive drop that’s lasted more than two months.
According to AAA, the average price in the San Diego region fell to $4.589 on Monday. That’s 23 cents a gallon lower than a week ago, 90.5 cents lower than one month ago and almost $1.85 cents cheaper than the all-time high of $6.435 set on Oct. 5.
Monday’s average price is 3 cents cheaper than the previous low for the year of $4.619 that was posted on Jan. 27 and it’s 4.4 cents lower than one year ago.
“This has been a very difficult year for drivers,” said Doug Shupe, corporate communications manager for AAA of Southern California. “We saw record-breaking gas prices that really left a lot of drivers scratching their heads, wondering when these prices are going to reverse and we’re finally seeing that. It took a while but this is definitely a welcome relief.”
The price drop comes as the Auto Club expects 9.2 million Southern Californians to travel 50 miles or more between Dec. 23 and Jan. 2. That’s a 4 percent increase compared to last year and nearly matches pre-pandemic figures in 2019. AAA anticipates 8.1 million Southern California motorists will take to the roads and highways for the holidays.
“People want to get out there and and take those trips again,” Shupe said. “After two years of putting plans on hold and canceling trips, consumers are just embracing the fact that more domestic and international travel restrictions have lifted and they’re continuing the trend that we saw most throughout most of the big holidays this year to make up for lost time with their friends, families and loved ones.”
The average U.S. price per gallon on Monday sat at $3.262, down 52.1 cents in the past month and 6 cents lower than one year ago.
Patrick De Haan, head of petroleum analysis at GasBuddy, a tech company that helps drivers find the cheapest places to buy gas, said “there’s a laundry list” of reasons why gas prices are falling — some specific to California and others relating to the global fuels market.
The price of gasoline is connected to the price of oil and Brent, the international benchmark price for crude, traded Monday at $78 a barrel and the domestic benchmark, called West Texas Intermediate, closed the trading day at $73 a barrel — both near 2022 lows.
Nationally, De Haan said, gasoline supplies are up.
“In the last couple of weeks we’ve seen refineries basically using north of 95 percent of their capacity, which is unseasonably high,” De Haan said, “That means they’re processing more oil, turning it into things like gasoline and diesel.”
Internationally, China is the world’s largest oil importer. The Chinese government last week reversed its strict zero-COVID mandates but the sheer number of cases and the restrictions’ effects have softened global demand.
In California, a spate of planned and unplanned refinery outages in September have been resolved, resulting in increased gasoline inventories in the Golden State.
De Haan estimated the resumption of output accounts for about half of the fall in prices in the past couple of months and predicted California gas prices could drop another 50 cents “by the end of the year, start of next year.”
“Nationally, I think that the trend is that gasoline will eventually bottom out probably in the next couple of weeks but California will continue a little bit beyond that simply because of how much prices had gone up back in October,” De Haan said. “It’s football season, so nationally we may be somewhere in the fourth quarter of decline (in prices). I would say that California might be more like in the third quarter.”
The steep decline comes as Gov. Gavin Newsom has called a special session of the Legislature in Sacramento to enact a cap on profits for California’s five major refiners.
Newsom released a proposal last week that would dock refiners whenever their profits exceed a certain threshold. The exact amount was not specified but would be determined by a “maximum gross gasoline refining margin” based upon a calculation of the average profit per barrel that refiners earn each month for wholesale gasoline.
“Big Oil has been lying and gouging Californians to line their own pockets long enough,” Newsom said in a statement. “I look forward to the work ahead with our partners in the Legislature to get this done.”
“You cannot tax your way out of this problem,” said Western States Petroleum Association CEO Catherine Reheis-Boyd during a California Energy Commission hearing on gas prices Nov. 29. “The only result of a windfall profits tax will make the problem worse. You are sending the absolute opposite investment indication to anyone who wants to continue business here.”
Under Newsom’s proposal, the cap would be considered a “civil penalty” rather than a windfall profits tax. That’s an important distinction because a tax would require approval from a two-thirds of the state Assembly and Senate while a penalty would need just a simple majority.
Sacramento lawmakers are expected to take up the issue after the start of the new year.
