California Gas is ‘Out of Whack’ – Nearly $2 More than National Average. Who’s to Blame?

California has long been known as the country’s priciest place to fill up your tank, but these days the Golden State is “completely out of whack.”

As gas prices plummeted around the nation in recent weeks, California’s price at the pump has rebounded with a vengeance to an average of $5.58 a gallon.

That’s $1.89 more than the national average — the highest price gap in at least 22 years, according to a Bay Area News Group analysis of AAA data.

While Russia’s invasion of Ukraine drove prices higher around the world, California’s perplexing price swing is largely due to the local oil industry, experts say, which is putting the state on another planet when it comes to gas.

“The commodity price of gasoline in California has gotten completely out of whack,” said Severin Borenstein an energy economist at UC Berkeley. “If this holds, we’re just starting to see the increase. It’s going to go up even more.”

Although fuel costs are still down from their peak in June, drivers are contending with nearly seven months of average prices topping $5 a gallon.

“It’s unfair,” said Sonya Khvann, a single mother of three, who was pumping gas in Alameda on Friday. She spends about $800 a month on fuel shuttling around her children. “It’s not like you can change your career overnight,” said Khvann, a part-time real estate agent. “Not everyone can be in tech.”

Much of California’s high gasoline costs are explainable. The state’s 54-cent gasoline excise tax is among the highest in the country — only Pennsylvania’s is higher. There are also stricter environmental regulations and special fuel blends that prevent rampant smog from accumulating in cities, altogether these factors tack on roughly $1.20 to California’s gas prices.

But the widening gap between what everyone from San Jose to Los Angeles is paying compared to the rest of the country is due to the concentrated nature of California’s oil refineries, experts say. Due to the state’s special gas blend, California is often termed a “fuel island” because nearly all gas sold in the state is refined locally by a handful of companies, including Chevron, Marathon Petroleum and PBF Energy. That means mechanical hiccups at refineries can cause major price spikes not seen elsewhere in the country.

Tom Kloza, of the Oil Price Information Service, said the reduced flow of gas is likely due to refiners bringing equipment offline for maintenance. He said much of the oil industry deferred regularly scheduled maintenance in spring so they could continue reaping record profits during the energy price spike following the Russian invasion.

But it’s hard to get to the bottom of exactly why California’s oil refiners have reduced output now just as prices drop elsewhere. There has been no major refinery outage or catastrophe reported in recent months. Instead, experts glean information from oil production reports. “Because of antitrust regulations, we don’t know how individual refineries are operating,” said Kevin Slagle, vice president of the Western States Petroleum Association.

In a statement, the California Energy Commission said state refineries are seeing “temporary” production issues that, coupled with maintenance activity and “lower-than-normal gasoline inventories,” is driving the current price spike over the past four weeks.

The mysterious price surge comes as California Gov. Gavin Newsom has turned up the rhetoric against the oil industry as the Golden State moves to phase out most gas-powered vehicles by 2035 and expand restrictions on drilling. In a statement on Friday, Newsom’s office accused fossil fuel companies of “holding families hostage” while touting Sacramento’s plan to send up to $1,050 to California families to alleviate the financial pain.

“We’re phasing out the fear of gas prices and ushering in our oil-free future,” Newsom’s office added.

Borenstein has spent years studying the gap between California’s gas prices and the national average. He said the unaccounted-for difference, which he termed a “mystery surcharge,” took off in 2015 when gas prices spiked in the aftermath of a Torrance oil refinery explosion. Before the blast, the unexplainable price gap was about 2 cents, but afterward it ballooned to over 40 cents and has remained high ever since.

Kloza, Borenstein and David Hackett, an energy expert at Stillwater Associates, said there is no evidence of racketeering among the state’s oil refineries. There is an ongoing probe into gas pricing and oil industry practices in the State Assembly, however. Sacramento has a long history of accusing the industry of price-gouging and announcing investigations that yield few results.

Click here to read the full article at the OC Register

Comments

  1. Shawn Paul Boike says

    Why Dems?

  2. It is simple.

    You misuse and abuse a sector of the business community and you will get zero, zip, nothing, nada, cooperation to help that government.

    As the efficiency and clean fuels were developed the attacks increased. So why be nice to California and the voters who voted for Democrats?

    e.g. So. Cal. Gas has developed a carbon neutral product for house and industrial use. Where they rewarded? No. Where the attacked? Yes.

    It has been pointed out that hydrocarbon gas is now more environmentally friendly then Lithium batteries. It has been pointed out that wind farms are made with parts that are not bio-degradable and to hide it they are burying the blades, etc. on ranch lands in sparsely populated states.

    Has anyone seen the steady increase in local and state taxes for “highway” maintenance and stolen by Democrats for bike paths and none freeway/highway/road maintenance?????

    It is no mystery.

    Has anyone noticed the “bio fuel ethanol” that the Dems have demanded be added to gasoline increases air pollution and reduced mph for cars? Has anyone noticed that if it was taken out of the fuel mph would go up and there would be less gasoline burned?

    Getting it yet?

    Oh, and if you refuse to allow a new refinery then the older higher maintenance refineries take more time and money to maintain.

    Getting it yet?

    Geez and you still vote Democrat.

  3. Right on Really ??? How about $4.00 dollars over as of this week in Sacramento $6.59

  4. At most…. we should only be paying $2.00/gal

  5. More people moving out of CA than ever…news just reported state has 11% less revenue attributed to the mass exodus of Californians to other states where dems don’t rule.

  6. Robert K Dorn Sr says

    Thank the California Air Resources Board and Gavin Newsom, the buck stops right there

  7. Blame Newsome and Biden.

  8. HOW FUNNY…BIDEN CAN NOLONGER TAKE “AMERICAN GAS RESERVES” TO GET YOUR NAZI DEMOSHITS ELECTED…..THE NAZI DEMOSHIT PARTY IS HISTORY IN NOVEMBER AND IF YOU START ANY OF YOOUR BULLSHIT YOUR MEMBERS WILL WISH THEY NEVER EVEN JOINED YOUR NAZI PARTY.////THE MILITARY STANDS WITH TRUMP…….WATCH WHAT HAPPENS NAZI DEMOSHITS…THEN WHAT GOES AROUND COMES AROUND…OBAMA, CLINTON., BIDENS HOMES WITH BE INVADED WITH ARMS DRAWN…..BRING EACH OUT IN LEG SHACKLES….CIVIL WAR HAS BEGUN..KILL ALL NAZI DEMOSHITS….

    • Steve Douglass says

      Say Max, why don’t you go and play somewhere else. Your threats should get you booted from this website. I will send this link to some “friends” and they will have a little chat with the admins. This crap should not be allowed and in this day and age, someone might come knocking at your door.

  9. Boris Badenov says

    How about we use the massive amounts of oil and Nat gas that is UNDER CA. How about we build a few more refineries? How about the Dims and pretty boy actually care about CA and the people they give lip service to and plan ahead instead of sucking up to their billionaire donors. Importing our oil from the Middle East isn’t exactly environmentally friendly. How about building MORE nat gas power plants, how about actually building more Nukes? Gonna need them Fascist Dims way sooner than later, but you are too stupid or most likely are planning on,m moving out of here, when all of those All Electric dwellings and EV’s hit the grid. Guess the fools never heard of “don’t put all of your eggs in one basket”.

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