California Governor Orders Winter Gas Switch

California Governor Jerry Brown told state regulators to immediately allow oil refineries to make an early transition to winter-blend gasoline to help bring record prices at the pump under control.

“Gas prices in California have risen to their highest levels ever, with unacceptable cost impacts on consumers and small businesses,” Brown said in a statement today. “I am directing the Air Resources Board to immediately take whatever steps are necessary to allow an early transition to winter-blend gasoline.”

Winter-blend gasoline typically isn’t sold until after Oct. 31. Regular gasoline in California retailed at an average $4.655 a gallon today, 22 percent higher than the national average, according to AAA, the nation’s largest motoring organization.

Retail prices began to skyrocket after Exxon Mobil Corp. (XOM)’s 150,000-barrel-a-day refinery in southern California reduced production Oct. 1 after a power failure. That followed a fire that knocked out a crude-processing unit at Chevron Corp. (CVX)’s San Francisco-area plant in August and a Chevron pipeline that delivers crude to Northern California that was stopped because of contamination.

The Exxon refinery came back online at the end of last week. Earlier this month, the California Independent Oil Marketers Association asked the board for a waiver to begin the winter fuel early. Winter-blend gasoline is a mixture that evaporates more quickly than the gasoline sold in summer months, which takes longer to evaporate and is better for air quality during the smog season.

Allowing an early transition to winter-blend gasoline may increase California’s fuel supply by 8 percent to 10 percent with only a “negligible” impact on air quality, Brown said.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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