California Gas Hits $5.89 At The Pump

If you don’t live in California and are complaining that your gasoline prices are reaching $4 a gallon again, you may want to consider yourself fortunate.  According to AAA, the national average for regular gas is $3.818 per gallon and $4.413 per gallon for the E85 fuel.

The average price in California is $4.668 per gallon; 85¢ a gallon or 22% percent higher than the national average.  Mind you that is the average.  In some areas of California, the price has topped $5 per gallon.  Stations in the Big Sur area are reporting in with prices hitting $5.89 per gallon; $2 per gallon more than the national average.  In many places throughout the state, regular unleaded gas rose by 50¢ per gallon in just the past week.

One of the main reasons why the gas prices are so high in the state is that California has tougher clean air standards than other states that require a cleaner burning fuel to be sold at the pumps.  Consequently, the state has to rely on refineries within their state to produce the cleaner burning fuel as most other refineries throughout the nation are not equipped to produce the cleaner burning gas and diesel.

Being shut off from the rest of the nation’s refineries and having to rely on in-state production has placed California in a very tight energy crunch.  With the high demand for fuel and the strict air quality guidelines, the state operates on what John Auers, senior vice president of the energy advisory firm of Turner Mason & Co. describes as the ‘knife’s edge.’  Auers also commented:

“This is probably going to continue to recur because California has just enough refining capacity to supply its demand, but only if everything is running well.”

But everything has not been running well.  One of Exxon Mobile’s refineries near Los Angeles had a power failure on October 1, forcing the refinery to cut back on production.  Chevron had a fire at a crude oil processing plant in Richmond, California that resulted in the shutdown of a major supply pipeline to the northern part of the state.

Some wholesalers like Tesoro Corp. and Valero Energy Corp. are only selling gas to clients with binding contracts as the supplies are running low.  Some retailers in California, such as Costco Wholesale Corp. have run out of gas to sell to customers.

While this is what the industry experts are using as excuses for fuel shortages and skyrocketing costs for gas, I can’t help but wonder if there is another reason the $5 per gallon at the pumps in California.  California has been used in the past to push stricter regulations on the rest of the country.  Once something has been implemented in California, the rest of the nation eventually follows.  For example, many new cars sold throughout the US will meet California clean air standards.

So, if they (I’m still not sure who they are) can get California use to $5 per gallon, then it will be much easier to work in that direction for the rest of the nation.  When we complain about $4 per gallon, they’ll just tell us that people in California have been paying that for some time already and to get use to it.  We’ll hear the same thing at $4.50 and $5 per gallon until they are satisfied that they are gouging the American people enough and filling their pockets as full as they can fill them.