Gasoline Prices in California Headed Up as Oil Prices Keep Dropping; Poll Shows Support for Refiner Oversight
Refiners in State Producing 14.8% Less Gasoline Than Year Ago as Producers Push to Raise Pump Price
A sharp return to rising gasoline prices in California, pushed by refiner cutbacks on production of gasoline, may signal a national trend, said Consumer Watchdog. Production cuts at state refineries have far exceeded the state’s drop in consumption, pushing statewide average pump prices to over $1.80 a gallon, according to the daily AAA fuel gauge. Today’s federal report on national and state fuel prices is expected to show similar results.
"The refinery cutbacks are for purely financial reasons, with cuts far exceeding the state’s drop in consumption, " said Judy Dugan, research director of the nonprofit, nonpartisan Consumer Watchdog, "Now is the time for government to insert sharper oversight and regulatory controls of the refining industry. Otherwise, low oil prices will not keep translating to lower gasoline prices, and fuel prices are the first thing to prick a damaged economy."
A poll released last week by Consumer Watchdog found strong voter support nationwide for regulation and oversight of the oil and refining industry. When asked whether the Department of Energy should be given the power to regulate oil producers and refineries, voters favor the idea by a wide double-digit margin.
Nearly four in 10 (39%) approve of such regulation, while only one in five (20%) are opposed.
The intensity of support is all on the “favor” side. “Strong” support outpaces “strong” opposition by 17 points (30% strong favor; 13% strong oppose).
Around four in 10 (40%) remain “undecided.”
(See poll results here)
"The poll shows voters’ desire to get some regulatory control over the oil business, which has been in control of U.S. energy policy for too many years," said Dugan.
California gasoline prices rose about 7 cents in the last week, returning to their level of the beginning of December. At the same time, domestic crude oil has continued dropping to a spot price near $33 a barrel, at 2004 levels.
In the latest report from the California Energy Commission, issued Dec. 12, refineries were producing 14.8% less gasoline than a year ago for in-state use, while production of gasoline for export out of the state was up nearly 45%. (See Dec. 12 refinery report here.)
The most recent report on gasoline consumption in California, for the month of August, showed year-over-year consumption down 8.3%, and gasoline prices have dropped more than a dollar a gallon since then, noted Consumer Watchdog. It is likely that the price drop pushed consumption up despite the weakening economy. (see Board of Equalization gasoline consumption report here)
Consumer Watchdog has called for the new Obama administration to:
* Give the Energy Secretary the authority to require refineries to produce enough fuel to keep available a 30-day supply, which was the average on-hand supply as recently as the early 1990s, according to Energy Information Administration data. Such authority need be used only if there is evidence of supply restriction for price reasons, and prices are rising.
* Grant a similar authority to curb refiners’ exports of refined fuels in times of rising demand or refinery outages.
"California is often the leader in high gasoline prices, and the trend leader," said Dugan. "The state’s sharp return to rising prices, caused by deliberate cutbacks in supply, is good reason to get an early start on better oversight of the oil and refining industry as a whole."
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Consumer Watchdog is a nonprofit, nonpartisan consumer rights organization. For more information, see:
www.consumerwatchdog.org
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