Soaring Gas Prices in California
Br Carl Swenlin, Decision Point
According to a news clip I just saw, there is a gas station in the Los Angeles area currently selling regular gasoline for $5.58/gallon. Some gas stations are shutting down because the owners don’t want to buy gas at these prices for fear that they won’t be able to sell it. Prices have been moving higher over the last few months, but the recent increases have fallen like a ton of bricks on consumers.
My immediate response was to check the charts for crude oil and gasoline. We can see from the weekly charts that crude is about midway its five-year range, and has most recently been trending downward.
The chart pattern for gasoline is not suprisingly similar to crude; although gasoline is closer to the top of its five-year range. Nevertheless, it too has been trending down recently. So on a national basis it is not the price of oil or gas that is the culprit behind California’s gas crisis.
The problem it seems is that the fragile infrastructure for gasoline production and delivery in California has taken a few hits that have put a crimp in the figurative pipeline. Primarily supplies are drying up because of refinery outages.
Of all the articles I have read on this subject I have not seen a single chart. My purpose in writing this article was mostly to present the charts to people who may be following this story. A lot of inorrect assumptions and conclusions can be avoided by simply looking at the charts first. And we can clearly see that the price increases for gas in California are not related to a sudden rise in crude prices.
13 Comments
There is tremendous power in being an incumbent President. Could he not unholster his Executive Order signing pen with a quick-draw flourish and give temporary relief to the Boutique Gasoline regs to quickly end this. If this is a State of California, could he not get on the phone with the Governor and say, “Yo, Jerry! (ahem) Yes, The Honorable Edmund G. Brown, Jr., Governor of the State of California, this is the President of the United States speaking. As a fellow Democrat, I need a favor from you, to help me, to help you, to help the people of California and the people of this Nation.”
Would not such bold action add to a sense of inevitability regarding reelection? Why is the President not taking action?
Probably licking is wounds and to busy prepping for the next debate.
why? Cali is already in the err..um.. “Tank” lol for the POTUS.
The reason the local prices are not trending with national crude prices is that California has summer blend requirements in effect until Oct 31. Hence the refinery outages have caused a shortage in the supply of CA summer blend gas, which cannot be substituted by gas from elsewhere. If the CA Air Resources Board grants a waiver to switch to the winter blend earlier the price discrepancy should disappear.
From what I have read this sounds right. One must ask though – if the regulations are put in place to protect the environment (regardless of the resultant spikes in prices), shouldn’t Californians lead by example and not complain? Why would they ask for a waiver? After all, high gas prices are a small price to pay for clean air! Sorry – couldn’t resist.
I personally would agree it is a small price to pay. However since none of the health or environmental costs of gasoline use have previously been internalized, I doubt there is any widespread public willingness to pay a higher cost at the pump. One possible solution would be for other states to adopt the same air quality standards, requiring more widespread distribution of the summer blend, which would allow oil distributors to substitute supply from other states when things like this happen. You have to wonder if the oil companies aren’t pretty happy with this situation though. Cases like this, with this timing, look highly suspicious in light of both the presidential election and pressure at the state level to relax air quality standards. At the end of the day people are more concerned with their pocketbooks than long term (but very real and significant) health and environmental costs, which makes it pretty easy for oil companies to play public anger against “job killing government regulations.”
I agree the California blend sucks with all those issues. It’s not great on the enviroenmtn either.
Louise – that method I’ve used myself. It’s a really well detailed piece of information too. Well worth checking out.
I managed to save hundreds on my fuel bill. My friend gave me some tips and pointed me to this website – http://green-energy-at-home.com/wp/save-1200-on-your-gasoline-bill and it gives all the help you need to save on gasoline prices.
I am all in favor of capitalism and making money, but instead of linking to something behind a paywall, perhaps you could share a summary of the important points on your strategy.
I have a very simple strategy, one that does not require a ‘tuneup’ (whatever that is on an OBD-II car) or buying a hybrid car.
Just don’t drive so much. Yes, this is conservation at its simplist, austerity at its most austere, but you can pretty much save gas in proportion to reduction in miles you drive. And your car will last longer.
By groceries on the way home from work. Choose a church/synagogue/mosque/temple closer to your house. Take a walk instead of going for a drive “to go out” when you need to be entertained.
My program of gasoline austerity is, well, austere. A lot of us, myself especially, are in the habit of “hopping in the car” when we need something to do or just one to “clear our head.”
My wife grew up on a family farm, and her parents had to drive a considerable distance just to do any kind of shopping, so shopping trips became “special occasions” (funny thing, I am told, those special occasions fell on rainy, dreary days when Dad couldn’t take the tractor out in the field). A strategy for coping with higher gas prices for suburban/exurban home dwellers is to regard trips “let’s get in the car to do some shopping” also as special occasions.
I am told that strategists in the retail industry already know this, that with Peak Oil, we are not going to turn the clock back on moving into “density” or “smart urbanism” living arrangements or solve the problem with mass transit. Instead, families will adapt by making fewer trips and making larger purchases on the trips they make to retail establishments.
Gallon? If only you Americans would finally switch to the metric system…
BTW, in Europe, the gas price is somewhere around 1.70 – 2.10 Euro per Liter
Yes! Measuring fuel consumption in Litres per 100 Km would definitely save copious volumes of fuel.
Why didn’t someone suggest this earlier?
Nobody made that claim, so your comment is somewhat out of context.
I live in Goleta, CA, near Santa Barbara. There’s an oil platform about 2 miles off the coast that I can see from my back yard. There’s another 15 or so platforms lined up in rows to the East and West (the coast here runs East-West). There’s an oil refinery about 2 miles from my house (the same one the Japanese shelled from a submarine in WWII to cause terror — the Ellwood refinery). There’s another refinery about 15 miles up the coast. All that oil, and we have TERRIBLE gas prices! It really pisses me off. The station closest to my house is always WAY above the prices way out in the middle of the Mojave Desert where my Dad lives. In fact, I can drive another 5 miles and the price goes down about 50 cents a gallon, but they are still some of the worst in the state! I think it’s because I’m near the university (UCSB) and they can probably gouge the kids w/ Mom or Dad’s credit card, filling the tank w/o paying any attention to the price.