NEW YORK ( TheStreet) -- Wholesale gasoline prices shot up in the Los Angeles area on Thursday as British oil giant BP (BP - Get Report) carried out maintenance work at its Carson, Calif. refinery.
The maintenance work at the 265,000-barrels-a-day refinery was reportedly unplanned.
PFG Best senior energy analyst Phil Flynn described the action as a "cash market scramble."
"The LA area has had refinery issues and when the refinery goes down unexpectedly there is a scramble in the cash market to make up for supply by those unsure of how long they will be down," Flynn said.
During the day, the cash price of "prompt 87 RBOB" unleaded gasoline in Los Angeles was trading at $3.0275 a gallon, while prices in New York were at $2.8124.
"When regional supply disruptions happen -- such as the Carson refinery -- the differentials in LA increase because there are shortages, and wholesalers -- petrol pump owners, fleet operators -- are willing to pay a premium to ensure they have access to gasoline," Schork Report analyst Hamza Khan explained.
"Meanwhile, wholesalers in New York aren't affected by the Carson refinery disruption and thus don't have an incentive to pay more for gasoline."
Still, Tom Kloza, the Oil Price Information Service's chief oil analyst notes that gasoline prices in California have been fetching lower prices since Labor Day. In late August, California gasoline was priced at about $3.25 a gallon.
Gasoline wholesale prices in the east of the Rockies' markets have been trading between $2.75 to $2.83 a gallon, down about 20 cents a gallon from early September, said Kloza.
Kloza says gasoline typically underperforms crude oil this time of the year.
"Interestingly, after a driving season which saw gasoline fetch a slightly higher price than diesel -- most of the time -- at wholesale, it is diesel that is now beginning to make a stealth climb," Kloza remarked. "Wholesale prices are in the $3.03 to $3.20 gallon neighborhood, depending on the bulk market, or about 30 cents a gallon or more above gasoline."
Oil and gas stocks were moving higher on Thursday.
rose 3.1% to $39.48;
(EOG - Get Report)
added 2.8% to $90.24;
gained 2.1% to $30.27;
was up 1.1% to $32.79;
Carrizo Oil & Gas
(CRZO - Get Report)
was up 0.9% to $28.87;
Kinder Morgan Energy Partners LP
rose 1.1% to $69.71 and
Southern Union Company
added 1.1% to $42.07.
-- Written by Andrea Tse in New York.
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