Tuesday, May 01, 2007

California Gas Prices Hit All-Time High.

According to the Department of Energy's weekly survey, this week the average cost of self-serve regular gasoline shot up 4.3 cents to an average of $3.359 per gallon-- an all-time high. Nationwide, the average price is $2.971.

In a stupefying act of hypocrisy-- event for the activist community-- the Foundation for Taxpayer and Consumer Rights, in today's Los Angeles Times, blames the high cost on "oil companies" for not expanding refining capacity.

Everybody knows refining capacity is the problem-- a problem exacerbated by the fact that California has seasonal gasoline forumlations to comply with clean air regulations. But to suggest that "oil companies" are wholly to blame for a dearth of refining capacity is ludicrous.

Can you imagine the outcry if an "oil company" announced plans to build a new refinery in California? Just imagine it! Environmentalists, NIMBY's, and a whole host of other activists would go absolutely bananas, pulling out all the stops to block it.

Similarly, imagine if an "oil company" announced plans to merely expand an existing refinery-- you can bet there would be a similar outcry.

So that leaves folks like the FTCR to hang their hat on allegations of foot-dragging by refiners-- allegations that they take refineries off-line for longer periods of time than are necessary in order to create supply shortages.

Has that ever happened? It would be naive to believe it hasn't, but is that the root cause of California's refinery shortage or merely a symptom of the fundamental problem of too much demand and too little capacity?

Gasoline is a zero-sum game in California. We either need to make more of it-- that means more refining capacity (i.e., more or expanded refineries) or it means decreased demand (i.e., some meaningful effort to modify the driving habits of Californians). Don't count on either any time soon.

Gasoline costs driven to a record [Los Angeles Times]