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Originally published Saturday, October 6, 2012 at 4:00 AM

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Calif. gas prices hit all-time high

The price of gasoline rose to an all-time high in California and is expected to continue climbing before leveling off later this week.

Associated Press

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LOS ANGELES —

The price of gasoline rose to an all-time high in California and is expected to continue climbing before leveling off later this week.

The record of $4.6140 for a gallon of regular unleaded was set on Saturday, just by a fraction of a penny over the previous high of $4.6096 on June 19, 2008, according to AAA spokesman Michael Green.

Saturday's price was the highest in the nation, with the Golden State leapfrogging Hawaii this week as the state with the most expensive fuel due to a temporary reduction in supply. In some locations, fuming motorists paid $5 or more per gallon while station owners had to shut down pumps in others.

"I seriously thought it was a mistake on the sign when we pulled in," said Nancy Garcia, 34, while filling her Honda Accord at a Chevron station in the Los Angeles neighborhood of Highland Park. She paid $4.65 a gallon for regular grade and said she couldn't afford to fill her tank all the way.

AAA's Daily Fuel Gauge report said the national average Saturday was about $3.81 a gallon, the highest ever for this time of year. However, gas prices in many other states have started decreasing, which is typical for October.

The dramatic surge came after a power outage Monday at a Southern California refinery that reduced supply in an already fragile and volatile market, analysts said, but the refinery came back online Friday and prices were expected to stabilize by next week.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, predicted the average price could peak as high as $4.85.

"There is some relief in sight but probably not for a couple of days. Early next week is when we may see some more significant declines ... but at retail prices, prices may climb for the next two to three days before they start to come down," he said.

When supplies drop, wholesale prices rise. Then distributors and station owners have to pay more to fill up their station's tanks. They then raise their prices based on how much they paid for their current inventory, how much they think they will have to pay for their next shipment, and, how much their competitors are charging.

A web of refinery and transmission problems is to blame, analysts said. The situation is compounded by a California pollution law that requires a special blend of cleaner-burning gasoline from April to October, said Denton Cinquegrana, executive editor of the Oil Price Information Service, which helps AAA compile its price survey.

"We use the phrase `the perfect storm,' and you know what, this current one makes those other perfect storms look like a drizzle. I don't want to scare anyone, but this is a big problem," Cinquegrana said. "Run-outs are happening left and right."

Among the recent disruptions, an Aug. 6 fire at a Chevron Corp. refinery in Richmond that left one of the region's largest refineries producing at a reduced capacity, and a Chevron pipeline that moves crude oil to Northern California also was shut down.

There was some good news, however.

Exxon Mobil Corp. said a refinery in Torrance returned to normal operations Friday after the power failure Monday disrupted production for most of the week. State officials said with the refinery coming back online, prices should start falling.

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Contributing to this report were AP writers Sandy Shore in Denver, Gillian Flaccus in Los Angeles, John Marshall in San Francisco and Gosia Wozniacka in Fresno.

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