As gas prices reach record highs in the state of California last week, Governor Jerry Brown has decided to implement new policies to lower the costs and get drivers back on the road. According to recent news reports Brown has instructed the California Air Resources Board to take immediately steps to increase the supply of fuel to the state. This will be done by selling a new winter mix of gasoline that the state generally does not release for sale until the month of November.
This winter blend evaporates more quickly than summer gas, but it could increase the fuel supply by as much as 10% and could immediately start to lower gas prices. This move has not been made sooner because the summer blend gasoline is more environmentally friendly
Legislative members agree that the prices in the Golden State have risen to levels which are now beginning to impact small businesses and customers. Although Californians have grown accustomed to gas prices which are generally higher than the national average, they have now reached an average of $4.66 throughout the state which has drivers reeling. The gas costs jumped suddenly last Thursday and have continued to rise.
Much of the criticism has been hurled at Governor Jerry Brown. Many drivers recognize that other states have not faced the same types of gas issues and California seems to pay the price that others do not have to pay.
Much of the blame has been directed at the refineries. For instance, power failures and a fire two months ago have lowered the amount of production in the last few months. The Bay area fire eliminated an estimated 245,000-barrel-a-day production which has not resumed.
There are other issues which are also being investigated. Calls were made by Senator Dianne Feinstein to investigate the variation in California energy costs which she claims “cannot be explained by market fundamentals and which turn out years later to have been the result of malicious and manipulative trading activity.”
So why is gasoline so expensive in California? First, they use a more expensive gas formulation. They also have the strictest emission control regulations in the country, even stricter than the federal government. Given the requirements for this state this means that California drivers have to have refineries which are designed to make their special formula and when there is a shortage gasoline cannot be trucked in from other states to lower the costs or increase the supply. And what else increases the costs? Taxes. California drivers pay an average of 68 cents per gallon of gas in taxes and more than half of that goes to the state.
So, what can we deduce from this situation? Although the price of oil has risen and that can account for some of the spike in oil prices throughout the nation, California has implemented policies and decided that certain environmental ideals are more important that having affordable gas for the citizens of their state.
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