Gasoline prices in California have escalated to record highs, spiking 50 cents a gallon in a week and prompting Governor Jerry Brown to advocate laxer smog rules so oil refineries can boost supplies of less expensive fuel blends. Regular gasoline in the state has soared to an average of $4.67 a gallon, a staggering 22 percent higher than the national average, according to AAA’s nationwide fuel price survey.
The average price of gas in California lingered at $4.17 a gallon on October 1, but has boosted every day since, with the worst increase being a 17-cent hike on Friday — placing it over $1 a gallon higher than in a dozen other states. Many gas stations are displaying prices seen nowhere else in the country, including those in the Big Sur area featuring prices as high as $5.89 a gallon.
With the gas crisis has come widespread cases of criminal activity, as police departments scramble to catch thieves who steal fuel from gas stations and other business, such as car and truck rental agencies. In Roseville, a town in metro Sacramento, thieves targeted two stations, peeling out with nearly 1,000 gallons of the increasingly expensive fuel.
James Hamilton of Econbrowser asserts that the turbulent rise in gas prices is prompted largely by two culprits, a lack of pipeline capacity and the state’s overly burdensome standards on air quality:
The Chevron refinery in Richmond (across the bay from San Francisco) has a normal capacity of 243,000 barrels per day, or 8.5% of the total petroleum products supplied to Petroleum Administration for Defense District 5, of which California is a part. But a fire at the Richmond refinery in August has significantly reduced its production.
The Kettleman-Los Medanos pipeline, which carries 85,000 barrels per day of crude oil to the San Francisco Bay Area, has been closed since mid-September due to organic chloride contamination. And on Monday, a power outage shut down ExxonMobil’s 149,000-barrel-per-day Torrance refinery in L.A.
Two factors allow the price in California to spike much higher than the rest of the country. First, a different blend is required to meet California air quality standards. Second, there is little pipeline capacity to bring in refined product from elsewhere.
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Photo: Luis Cuevas changes the gas prices at the Shell station off California State Route 99 as truckers deal with rising gas prices in Fresno, Calif., Oct. 5, 2012