Gasoline prices in California hit record highs again on Monday, with the price of a gallon of regular going for an average of $4.703 in Los Angeles County.
Statewide, the average was $4.668 per gallon, up a little more than a penny over Sunday's record price.
But prices at the wholesale level were already starting to come down, signalling a possible end to the price spikes.
Sunday night, the California Air Resources Board moved to increase the supply of fuel in the state, telling refineries that they could begin making and distributing a cheaper type of gasoline that is normally only allowed in California during the winter.
Gov. Jerry Brown earlier in the day had called on the agency to act, and by evening a message had been sent to industry players that they could start making and selling this so-called winter-grade fuel immediately, said Dave Clegern, a spokesman for the Air Resources Board.
It will still take a few days for the fuel to make it to market, Clegern said, but wholesalers already appear to be responding.
Sen. Dianne Feinstein (D - CA), meanwhile, asked the Federal Trade Commission to investigate whether refineries caused the price spikes by deliberately manipulating the supply of gasoline in the state.
Feinstein cited a story by the Reuters news service on the possibility that a type of market manipulation called a "short squeeze" was behind a recent drop in supply.
California's other Democratic Senator, Barbara Boxer, also called for an investigation.
"I don't know whether there has been purposeful manipulation, but I want to find out," Boxer said during an appearance Monday in Glendale.
Marie Montgomery, a spokeswoman for the Automobile Club of Southern California, said a panic on the wholesale market caused prices to hit record highs, especially for the mom-and-pop gas stations that do not own their own refineries.
A big spur, she said, was a decision by the refineries to keep as little of the more expensive summer-grade gasoline on hand, so as to avoid being caught with it after October, when winter-grade gas goes on sale in the state.
The summer-grade gasoline is less likely to contribute to California's notorious summer smog problems, but it costs more to make, prompting price hikes every summer.
But this year, just as wholesalers were letting their supplies of the summer formulation dwindle to the lowest levels in years, several other factors combined to put a serious crimp in the amount of gas available to local retailers, Montgomery said.
A power outage at a major Southern California Exxon refinery and fears of contamination in a Kern County pipeline drove supplies down further. To make matters worse, a Northern California refinery struck by fire earlier this year is still not back up to capacity.
"The week before this happened, the inventories were reported to be at their lowest levels in a decade," Montgomery said.
"They were just trying to really not make one penny's worth more of the more expensive gas than they had to, and so then they got caught in this perfect storm of events."
Last week, the price of a gallon of gasoline spiked as high as $5.79 thanks to a dramatic increase in the wholesale cost of fuel and panic-buying among gas station owners.
Fuel was also harder to find at many locations, as some mom-and-pop retailers decided to sit out the price hikes and just shut down. Others looked for gasoline to sell, but couldn't find it.
The automobile club has an online service that helps consumers find the least expensive gasoline in their area.