Whipped Cream Difficulties

Gas is expensive in California.

Even as gasoline consumption has declined in California in recent years because of high unemployment and increased vehicle fuel efficiency, refiners have been able to keep prices about 35 cents a gallon higher than the rest of the country.

Gee, I wonder why that is?

…the reason refiners made a killing while retailers such as Arya lost their shirts isn’t conspiracy, it’s economics. Oil companies operate what amounts to a legal oligopoly in California — an arrangement that probably will contribute to more wild gas spikes in the future.

You don’t say? Tell us more, Los Angeles Times.

That’s because the Golden State’s gasoline market is essentially closed. The state’s strict clean-air rules mandate a specially formulated blend used nowhere else in the country. Producers in places such as Louisiana or Texas could make it, but there are no pipelines to get it to the West Coast quickly and cheaply. As a result, virtually all 14.6 billion gallons of gasoline sold in California last year were made by nine companies that own the state’s refineries. Three of them — Chevron, Tesoro and BP — control 54% of the state’s refining capacity.

But why doesn’t someone come into the California market and open new refineries? Or re-open some of the mothballed ones?

Refiners contend that the price of gas reflects the higher cost of doing business in California. It costs as much as 15 cents a gallon more to refine the state’s clean fuel blend, and green regulations chip away at the bottom line. Fuel taxes, too, are higher than in many other regions.
“It’s a very difficult, challenging market,” said Tupper Hull, spokesman for the Western States Petroleum Assn., whose members include most of the region’s oil companies and refiners.
In August, the group released a report predicting that state rules to limit greenhouse gas emissions and push alterative fuels could force as many as eight of California’s refineries to close in coming years.

By the way:

At the same time, the number of refineries operating in California has declined to just 14 today from 27 in the early 1980s.

This entry was posted on Monday, October 22nd, 2012 at 1:33 pm and is filed under California Über Alles, Cars, Clippings, Law. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.