CA gas spikes raise hackles

gas pumpCalifornia gas prices have once again jumped out to dramatic highs, setting consumers on edge and reopening old questions about who’s to blame. Some analysts, including those at GasBuddy.com, pointed a finger at foreign wholesalers, while others, such as Trilby Lundberg, said those suppliers were now moving their product quickly to market, the Associated Press reported.

“Wholesale prices in Southern California jumped by about 70 cents late last week. A report on gasoline inventories from the U.S Department of Energy appears to have sparked the run-up,” as U-T San Diego reported. “Statewide inventories of low-polluting gasoline blends, meanwhile, shrank to 10.04 million barrels on July 3 — the lowest in 12 months, according to the California Energy Commission.”

Regulators in Washington, D.C. added more bad news. According to the San Jose Mercury News, “federal energy officials say California refiners had to use 1.1 million barrels from their storage tanks. It’s so bleak that imports to the West Coast sank to zero last week after averaging more than 100,000 barrels a day over the previous four weeks.”

Infrastructure problems

Despite concern over the state’s gasoline infrastructure, California has remained an outlier relative to the rest of the continental United States. “They have their own refining system. They can’t get the imports the rest of the world does and they have an adversarial relationship system between the refiners and the regulatory community,” Tom Kloza, global head of energy analysis at Oil Price Information Services, told CNBC.

Because of a combination of high taxes and unstable supply, the price floor for California gasoline has long hovered well above per-gallon costs elsewhere. “Retail prices in California are traditionally among the highest in the lower 48 states because of relatively high state and local taxes combined with strict environmental rules governing gasoline blends and pollution,” U-T San Diego observed. But some critics have cautioned that the Golden State’s broadening regulatory effort to further reduce fossil fuel usage could contribute to surprising spikes. Kloza warned CBC that California “can’t tell refiners you are going to put them out of business and expect that everything is going to run smooth.”

A consolidated market

At the same time, some consumer advocates put forth a competing argument, pinning the blame for this most recent spike on refiners themselves. Jamie Court, president of Santa Monica-based Consumer Watchdog, told the Los Angeles Times that circumstantial evidence suggested prices were being manipulated. “Part of the problem, Court said, is that the state has a small group of companies able to set prices as they please — the definition of an oligopoly.” Court cited “a recent streak of high premiums charged to brand-name stations by refineries” and the export of “record amounts of fuel to other countries, which can keep state inventories low.

Charges of price manipulation have been explored in the past. As the Los Angeles Times noted, investigations conducted more than a decade ago revealed “major oil companies worked diligently in the 1990s to reduce refinery capacity so that profits would improve.” But investigators “found no evidence of collusion or price fixing.” Nevertheless, the Times added, California’s production capacity has been dramatically limited and consolidated. “In 1982, the state was home to 30 gasoline-producing refineries; now there are 11. Chevron Corp. and Tesoro Corp. control more than 50% of the state’s refining capacity.”

Calls for relief

Californians routinely consider how policymakers can make prices and supply more reliable and predictable. In an unusual move, GasBuddy itself launched a petition for relief directly from Sacramento. “We’re anticipating increases that could surpass 50-cents a gallon in Southern California and up to 20-cents a gallon in Northern California by next week,” said Patrick DeHaan, the site’s senior petroleum analyst for GasBuddy.” That’s why we’re asking Governor Brown to intercede and issue a waiver in the public interest.”

15 comments

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  1. Ronald Stein
    Ronald Stein 14 July, 2015, 05:41

    California transportation fuels will continue to be the priciest in the USA. The crusade to obliterate the oil industry in California has shuttered many of the in-state manufacturers of our transportation fuels, leaving a few manufacturers left to produce 40 million gallons of transportation fuels daily to meet the demands of the 97% of the 30 million vehicles that do not run on electricity or other alternative fuels. Sounds like a lot of fuel, but it equates to just over 1 gallon of gasoline or diesel per day, per vehicle.

    To make matters worse, California remains one of the largest economies in the world even though the Golden State’s 38 million citizens live on an “energy island” with the Pacific Ocean on one side and the Rocky Mountains on the other. The alternative to in-state manufacturing is to import our transportation fuels from other states or foreign countries with significantly fewer environmental regulations than California, which would result in an increase in the World’s Greenhouse Gases. However, it would take other states and countries time to convert to California’s boutique fuel blends and many weeks to ship those products into our ports, most likely resulting in even higher costs for our transportation fuels.

    California’s flagship climate change policy AB 32, The Global Warming Solutions Act, was signed into law in 2006 at a time when California was contributing a minuscule 1% to the world’s greenhouse gases (GHGs). Nearly a decade later, California still contributes a miniscule 1% and has had little to no impact on the reduction of global GHG emissions. Yet, the state is on a go-it-alone crusade that generates billions of dollars for the government at the expense of businesses and the financially challenged as the costs of burdensome regulations disproportionately affect young people and other Americans who are living within limited means.

    Reply this comment
    • Ulyssess Uhaul
      Ulyssess Uhaul 14 July, 2015, 08:26

      Thk you for your tome, but we have an unwritten rule no El Collapso style epistles.

      Short and piffy!

      Reply this comment
      • Dyspeptic
        Dyspeptic 14 July, 2015, 17:35

        I thought the unwritten rule was to ignore whatever comments Uhaul posts.

        By the way, I understand “Short”, but what exactly is “piffy”?

        Reply this comment
  2. Sean
    Sean 14 July, 2015, 09:27

    “Retail prices in California are traditionally among the highest in the lower 48 states…” Is that a feature or a bug?

    California also has the highest or nearly the highest electricity prices in the lower 48. That did not happen by accident either.

    I suspect the folks in the legislature’s only problem with the price spikes is that there is no windfall for the government when that happens. It will be fixed soon I’m sure.

    Reply this comment
    • bob
      bob 14 July, 2015, 17:17

      Sales taxes are applied to gas and are a percentage of the price so the criminals in Sucramento get more money when the price goes up.

      Reply this comment
  3. doug
    doug 14 July, 2015, 09:51

    why do we forget that the mentioned AB32 gas tax hike took effect this january 1st? everyone forgets that detail.
    we voted for this. (i didnt).
    and californians dont want to build another refinery.

    Reply this comment
    • bob
      bob 14 July, 2015, 17:15

      Actually the Colliefornia (as Ahhhnode calls it) voted NOT to postpone AB 32. It was already signed into law by Ahnode Maidenbonger after the DemoNcrats overwhelmingly passed it in the legislature.

      Reply this comment
  4. Bubba
    Bubba 14 July, 2015, 10:32

    Just got back from Texas, average price 2.49/gal! No Where AZ, off of Interstate 8 had a price of 2.88/gal.
    It’s time to stop this stupidity of California needing special gas just to appease Mother Goya and C.A.R.B!

    Reply this comment
  5. BobP
    BobP 14 July, 2015, 11:09

    Per GasBuddy today’s av regular gas prices in Odessa, west TX are 2.42 – 2.52.
    Now give me another excuse why CA gas prices are so high when Odessa is out in the middle of nowhere.

    Reply this comment
  6. Ulysses Uhaul
    Ulysses Uhaul 14 July, 2015, 11:15

    $4.24 in Corona Del Mar today…..oh well….at least there is Taco Tuesday……ocean beautiful today.

    Reply this comment
  7. bob
    bob 14 July, 2015, 17:12

    …reopening old questions about who’s to blame.

    Who is to blame?

    How about the idiot sheeple Colliefornia (as Ahnode sez) voter?

    They could have postponed Ahnode’s AB 32 years ago but voted against it.

    And this is just the beginning. AB 32 will increase gas prices EVERY year.

    And the DemoNcrats want even MORE taxes on gas.

    Darrell Stinkbug said he wanted the little people to feel pain at the pump.

    Hear that, idiot voters???

    DemoNcrats want to inflict pain on you.

    WHY DO YOU KEEP VOTING FOR THEM???

    Reply this comment
  8. Dyspetic
    Dyspetic 14 July, 2015, 18:00

    “Jamie Court, president of Santa Monica-based Consumer Watchdog, told the Los Angeles Times that circumstantial evidence suggested prices were being manipulated. ”

    These self appointed “Consumer Watchdogs” are full of excrement. Who elected Jamie Court to be anyone’s representative? Nobody, that’s who. He’s just another self serving, economically ignorant hack pushing this weeks lunatic left wing conspiracy theory.

    If it is so easy for the refinery “oligopoly” to raise prices then why do they ever come down? And why are prices so high in Commiefornia but so low elsewhere? As others have noted gas prices are much lower in all of the neighboring states. Why would the evil oligopoly allow that? The real problem isn’t price manipulation by producers but a brain dead Marxist mentality rampant among Commiefornias political elite. They hate our car culture so naturally they do everything they can to destroy it with higher taxes and regulatory costs.

    That “piffy” enough for ya Uhaul? 🙂

    Reply this comment
  9. Dork
    Dork 15 July, 2015, 06:58

    Looks like a lot of people are noticing the “HOLLYWOOD ENERGY TAX” implemented by Big Hollywood and the Girly Man Schwarzenegger.

    Just Remember folks, when you decide to patronize anything HOLLYWOOD, You are Supporting this crap!!!

    Reply this comment

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