Shortage of gasoline production anticipated in California this fall by regulatory authority
California is bracing for a gasoline production shortage through November, due to planned and unplanned maintenance at the state's refineries. In a bid to maintain market stability, the California Energy Commission is actively engaging with petroleum companies to address this issue.
Tai Milder, the director of the California Energy Commission's Division of Petroleum Market Oversight, sent a letter to Governor Gavin Newsom and state legislative leaders on Tuesday, emphasizing the importance of petroleum companies maintaining adequate inventories.
The gasoline price stability in California is partly dependent on the actions of petroleum companies. Milder advises these companies to avoid reactive spot market behavior to ensure gasoline price stability. He suggests that they should order sufficient imports to address the shortage.
The California Energy Commission is also seeking to collaborate with petroleum companies to ensure a stable gasoline market. The Commission's focus is on communication with these companies to address the production crunch.
Market activity suggests that gasoline traders are aware of the coming shortage, as evidenced by elevated spot market forward pricing for October and November delivery. The market may avoid acute price increases due to stronger inventories this year, according to the announcement.
Milder's proactive approach by the California Energy Commission to manage the gasoline production crunch is commendable. The Commission is planning to engage with California's petroleum companies to drive home the importance of their actions in maintaining market stability during this challenging period.
The gasoline production crunch is expected to occur at a time when California historically experiences price spikes at the pump. Therefore, the Commission's efforts are crucial in ensuring that Californians are not unduly affected by these price increases.
In conclusion, the California Energy Commission is taking a proactive approach to address the upcoming gasoline production shortage. By engaging with petroleum companies and encouraging them to maintain adequate inventories, the Commission aims to ensure a stable gasoline market and prevent acute price increases during this period.
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