Why High Gas Prices in California Don't Compute

by Robert Gisel


Hoping to find some logic in the high price of gasoline in California, the 2nd or 3rd highest depending on who you ask, it just doesn't compute.

I had thought it had to do with the commodity price of the barrel of oil. In this case the barrels are coming from California and don't specifically have to do with suspension of exports from Libya or the whims of the Saudis.

Average gas price in California is $4.21, though, that figure may be already too low against the rapid rise currently happening, plus roughly 10 cents a week. In Hawaii it is $4.52 and it is $4.13 in Anchorage, Alaska. These are the three highest state prices. I can possibly understand the price in Hawaii, being across the ocean. California and Alaska are oil producing states and have their own gas refineries. Time to go back to logics class.

An ARCO owner said to me this was due to the high taxes, making up much of the cost. Per wiki.answers.com in California "Tax is 69.9 cents per gallon. Of that amount 18.4 cents is Federal Tax." Without that tax it is $3.51 per gallon. The lowest state prices with tax included are evidently Wyoming, Colorado and Montana, $3.52 to $3.61. I guess they must charge more in California because movie stars can afford it.

Per DemocraticUnderground.com "California gasoline production tops 1 million barrels a day". I don't know where they got their figure. Seems low. California caRFG ( California Reformulated Gasoline to reduce emissions) production, per a Berkley study of some years ago, indicated 15 billion gallons produced was commensurate with 14.8 billion gallons consumed (omitted time), where production was close to peak capacity and the added cost of 30 cents per gallon over the national average was due to the increased cost of producing and storing caRFG, and that Market Power, i.e., opportunity for price gouging, probably doesn't exist. One can wonder who paid for that study circa 2004.

Consumers have to get where they need to go so short term price spikes don't significantly curtail purchases. Opportunities for spurts of high profits are well covered by the PR lines in place by the oil companies. When the public are willing to pay there is not much to contest.

The California Reformulated Gasoline program implemented in January of 1992 on demand of the Air Resources Board is said to have produced, by 2003, the equivalent of the reduction of 3.5 million cars from California's roads. A large increase of the number of hybrid, hybrid EV and battery EV vehicles would have the same effect and probably be more economically feasible for the consumer dishing out money at the pump.

In other words, if the price at the pump concerns you then bypass this altogether with an Electric Vehicle. Free market being what it is and government intervention being what it is it is a good idea to take the initiative and seriously consider this alternative.