Will California gas prices drop as global oil costs plummet? Here’s what we know so far

Hanh Truong
·2 min read
15

Prices for global oil took a deep dive to levels not seen since summer 2021, according to the American Automobile Association. Will the drop trickle down to California gas stations?

And when?

“Given that the cost of oil accounts for 55% of what we pay for gas, it’s fair to wonder how soon prices will drop at the pump,” Andrew Gross, AAA spokesperson said in a Thursday news release. Oil prices were down to $60 per barrel.

“But gas stations paid for the fuel that is in their underground tanks weeks ago, when oil was nearly $15 more a barrel. So it will take time for any savings due to cheaper oil to be seen at the pump. And that is assuming the oil price does not rise again.”

Falling oil prices can lead to falling gas prices, said Patrick De Haan, head of petroleum analysis at GasBuddy. But various elements can offset that relationship and even make gas prices go up.

These factors include refineries.

De Haan said that refineries are typically undergoing maintenance in the late winter to early spring, resulting in a reduced capacity as they have to shut down to do this work.

“Part of the reason that prices had gone up dramatically in California, compared to the rest of the county,” he said, “was because of some of the issues that were occurring at refineries — that is during some of the maintenance as I’ve described.”

Will California prices go down soon?

There’s a possibility.

“We can expect some measure of relief across California,” De Haan said, “but not because of the price of oil decline.”

Some refineries in the state have cleared up issues that initially hampered the production of gasoline, he said, meaning there’s more supply now.

“Over the next few weeks, prices could drop 10 to 25 cents a gallon,” he said.

But don’t bet on it yet.

Something could change. There could be another refinery issue, he said.

See the latest prices

California average prices for regular fuel are around $4.87, according to AAA.

This is up more than 10 cents from last month, which was at $4.70.

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