by Calculated Risk on 10/11/2012 06:54:00 PM

Note: I'm in San Francisco attending the Zillow real estate forum. Best to all.

From Jim Hamilton at Econbrowser: Governor Brown solves California's gas price problem

California has separate gasoline requirements from the rest of the nation, and also requires a different, more-expensive fuel for summer sales relative to winter. Because refiners don't want to be stuck holding the summer blend through the winter, inventories of summer blend are intentionally low this time of year. That creates a problem when two of the main refineries producing the California summer blend get knocked out, as we just observed.
...
But two important developments have changed the picture. First, the Torrance refinery was back in operation by Friday. Second, on Sunday Governor Jerry Brown (D-CA) directed the California Air Resources Board to allow use right now of the winter blend instead of waiting as usual until the first of November, a move that the Board has implemented. This allows existing stocks of the winter fuel to be sold to add to the supply of the summer blend. ...

Several reporters have asked me what economic effects this episode may have. My answer is they should be pretty limited-- I'm expecting the retail price to come down almost as quickly and dramatically as it went up.

On Friday:
• At 8:30 AM, the Producer Price Index for September will be released. The consensus is for a 0.8% increase in producer prices (0.2% increase in core).

• At 9:55 AM, the Reuter's/University of Michigan's Consumer sentiment index (preliminary for October) will be released. The consensus is for sentiment to be unchanged at 78.3.


Another question for the October economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).