Photo: Brenda Priddy
California gasoline prices remain sky high this week, even after Gov. Jerry Brown took action last Sunday, and even after several lawmakers opened an investigation into the obvious: why prices are high.
First, let's start off with the Governor. While I can't say Gov. Brown is keeping prices at the pump high, he sure had plenty of opportunity to jump in to the situation even before gas prices skyrocketed. I personally
wrote an article that sounded the warning bells last Tuesday, when the California average for gasoline was a "mere" $4.22/gal. Jerry Brown apparently sat idle as GasBuddy warned its readers with various alerts across numerous platforms. He waited not one day, not two days, not even three days, but he waited five full days after we were aware of what was to come. We saw GasBuddy spotters reporting record spikes, driving the average up from $4.22/gal that Tuesday to $4.65/gal just four days later. The damage had already been done. In fact, the situation was already turning around by the time Gov. Brown stepped in. Why the delay? Politics? The news was all over the media by Sunday. The delay cost Californian motorists millions of dollars every day nothing was done.
Now secondly, some lawmakers want to open an investigation into how this could have happened, somehow blind again to something I've repeated over and over: refineries have no incentive to all out produce gasoline, leading to tight supply, higher margins for themselves, and motorists paying the price. We need no investigation, we know that mergers and sales have resulted in fewer California refineries in the past decade, we know that less competition generally means higher prices.
The price hikes were seemingly set in place by panic after ExxonMobil indicated their Torrance, CA plant was knocked offline last week after high temperatures and power issues. Simple fix? Change your fuel requirements away from special California blends of gasoline or build more refineries! Or don't let Phillips 66 shut down part of their plants for maintenance when issues elsewhere arise! Where's the oversight of refineries, who have a huge hand in determining gasoline prices? There is none! This is the same industry that has had drilling problems, oil spills, and more, they've proven that without regulation they will take American motorists to the cleaners. What's worse in California is that due to isolation from the rest of the country, and special blends of fuel, there isn't much other refineries can do to help! Perhaps a certain level of gasoline must be maintained, maybe refineries need permission to do work, or need to be better regulated, but something must be done, aside from investigations that go no where.
The biggest problem is the here and now. California prices remain in the $4.60s/gal even as wholesale prices of gasoline have fallen significantly in the last several days- now it is up to gasoline stations to lower their retail price as their wholesale cost drops. Where are the gouging investigations? Where is the California Attorney General reminding station owners to pass along changes in their cost?
Since gas prices in California peaked a few days ago, they've dropped a paltry two CENTS per gallon. Meanwhile, wholesale prices are well over 50c/gal lower than where they were earlier. Apparently there's nothing wrong with that, and that's a big part of the problem.