Once again
California's high gas prices have made the headlines: [bold added]
'Gas prices are spiking again in the Bay Area — as much as 20 to 30 cents a gallon higher than the California average and at least $2 a gallon more than the rest of the country, according to the latest data from the American Automobile Association (AAA).
The national average on Friday was $3.67 a gallon, compared to the Golden State’s $5.45, the highest in the U.S., according to AAA.
Bay Area drivers who are sometimes stuck paying close to $6 a gallon said they are suffering and finding alternate ways to get around.
AAA's Andrew Gross provides part of the explanation for the Bay Area's "premium" over the national average:
Gross said spring is also the time where gasoline is switched from winter blend to summer blend, which is more expensive to refine but helps keep air quality cleaner.
“And then you have to take into account location. The West Coast is what many consider an oil island in that it is far from the main oil production centers of Texas, Oklahoma and the Gulf Coast and those mega refineries down there as well,” Gross said. “And west of the Rockies it’s more challenging to build pipelines, so you tend to move product by rail and truck more than say east of the Rockies. So you also have higher distribution cost that factor in as well.”
Oil Price Information Service's Tom Klosa points to refinery closures:
In 2020, Marathon closed its refinery in the Bay Area, and over the last year Phillips 66 stopped processing crude oil at Arroyo Grande in San Luis Obispo and Rodeo in Contra Costa County, Klosa said.
“Both companies idled their refineries and are concentrating on supplying renewable fuels such as renewable diesel and sustainable aviation fuel. Neither is making gasoline, and that leaves the area without a safety net. Should one of the remaining refineries (Chevron Richmond, Valero Benicia or PBF Martinez) have issues, supply can become very challenging,” Klosa said.
The American Energy Alliance adds two more factors, taxes and regulation:
California has the highest gas tax in the country at 68 cents per gallon, compared to 39 cents for the national average, according to the American Energy Alliance.
The state also has a cap-and-trade program and low-carbon fuel standard that adds roughly another 46 cents a gallon, according to the group.
As surely as night follows day, California blames high prices on greed and price-gouging:
Newsom in November accused “Big Oil” of raking in “huge profits” last summer while gas prices spiked and said that “we’re continuing to hold them accountable with the new tools from our gas price gouging law.” But it remains to be seen how the new Division of Petroleum Market Oversight will affect gas prices.
California's blaming the industry is reminiscent of its railing against insurance companies until enough of them stopped writing policies. It's mystifying to these non-businessmen that oil refiners and insurance companies are leaving the State instead of getting in on that price-gouging action. Over a year ago
we wrote:
It's also clear that a persistent price premium must have an explanation other than capitalist greed, which, if that were the case, would exist peculiarly only in California. My hypothesis: gasoline producers have only 12 years to recover their investment [because of the ban on new gas-powered vehicles starting in 2035] in California plant and equipment, after which the market for gasoline will dry up. In the rest of the country refiners can count on a useful life of 20 years or longer, thereby lowering the prices they require to turn a profit
Not all California's politicians are that stupid, of course. They know full well that the high gas prices that their policies have caused are forcing drivers to consider buying EV's, but they're deflecting blame on to the fossil fuel industry, the left's whipping boy for the past 50 years. Very few in the media or academia are calling them out, so they continue to get away with their disingenuous explanations.
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