What California can do about record gas prices
Tough state regulation of auto pollution cuts off California from sources of gas outside the state.
Gas prices in California reached a new record today. They're not skyrocketing, like they did last week; they're inching up instead. Your Midwestern relatives likely have their jaws on the floor at our $5-a-gallon gas in California. But oil traders and industry experts know these extreme prices are not going to spread to the rest of the country. When it comes to gas, it's not a case of "as California goes, so goes the nation."
Stephen Schork is an oil trader in Villanova, Pa. When I ask what he thinks when he looks across the map to California and our crazy gas prices, he says: "You get what you deserve."
But he says that lovingly. He's a fan of California's environmental standards, the toughest in the nation. The state demands a special gas blend to meet those rules, so all our fuel is refined in-state. Plus, we don't have any major pipelines to bring us more in a pinch. Schork says that means, "from an oil infrastructure standpoint, you guys are an island."
An island with one major refinery down -- the Chevron fire this summer -- and two more with hiccups in recent weeks. You might think refineries in other states would take advantage, and maybe whip up some of that special California gas to truck in. But, the prices here aren't quite high enough for all that trouble.
And now, they're not likely to get there. Over the weekend, Gov. Jerry Brown relaxed the state's golden standards. That's brought instant relief, says Schork. "He just signed his name, and gasoline supplies in California probably just rose 10 percent now, because gasoline that wasn't allowed to be sold can now be sold."
Why not make that process automatic? That's what Gregg Laskoski at the price-tracking website gasbuddy.com suggests. "There should be some thresholds that would say: When wholesale prices of gasoline exceed this dollar level, we waive these requirements."
He says even as prices level off after this spike, oil refineries in California are still at the edge. Even minor disruptions could put them in danger of falling behind, and lead to another price hike. Laskoski also notes that California voters are unlikely to greenlight any new refineries -- some of the worst polluters around -- anytime soon.