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Gas prices spiking in California

October 4, 2012: 2:02 PM ET

Drivers in California could soon be paying nearly $5 a gallon for gasoline as prices in the wholesale market have surged this week.

Wholesale gasoline prices in Los Angeles jumped Thursday to $4.35 a gallon, according to Tom Kloza, chief analyst at the Oil Price Information Service.

The wholesale price is "by far the highest we've ever seen in that market," said Kloza. Once taxes and other costs are factored in, wholesale gas prices in California are at levels consistent with retail prices near $5 a gallon, he added.

"California is ground zero for one of the most dramatic price spikes in a while," said Kloza.

Gas prices have already surpassed $5 a gallon at a few filling stations in California, according to GasBuddy.com, a website that tracks retail prices.

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For example, a station in West Covina, a suburb of Los Angeles, was charging $5.31 a gallon for regular gas on Thursday, GasBuddy.com reported.

Retail gas prices in California were already on the rise. The average price for a gallon of gas in the Golden State rose 8 cents overnight to $4.315 on Thursday, according to a daily survey by AAA.

By contrast, retail gas prices nationwide averaged $3.784 per gallon on Thursday, up a fraction of a cent from the day before.

The average price in California for retail gas is already well above the record high national average price of $4.114 a gallon, which was set in 2008 when oil prices rose to $140 a barrel.

However, the latest gas price spike in California comes despite relatively subdued prices for crude oil, the conventional driver of pump prices.

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Oil futures for November delivery bounced back above $90 a barrel on Thursday after falling to $88 a barrel Wednesday. Overall, oil prices have been on the decline after rising near $100 a barrel in mid-September.

Analysts said the gas price spike in California stems largely from a series of refinery disruptions, including a power outage Monday at an Exxon Mobil (XOM) plant in Torrance, which normally produces 150 million barrels of gas per day.

"Extant refinery disruptions on the West Coast have sent the cash market aflame," said Stephen Schork, publisher of the energy industry newsletter the Schork Report.

Kloza said the surge in California gas prices probably won't last long. He estimates that prices will retreat sometime in October, although he said it is impossible to say exactly when.

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Ben Rooney
Ben Rooney
Staff writer, CNNMoney

Ben Rooney is a staff writer for CNNMoney. He covers the European debt crisis and other international finance stories, in addition to writing about stocks, bonds, investing and other Wall Street-related news. Follow Ben on Twitter: @ben_rooney

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